This week brings economic indicators that will gauge how much Middle East risk has affected Korea's growth. The confirmation hearing for Kevin Warsh, nominee for chair of the U.S. Federal Reserve, is also drawing keen attention.
The Bank of Korea (BOK) will release preliminary first-quarter real gross domestic product (GDP) growth figures on the 23rd. The BOK had initially projected first-quarter growth of around 0.9%, citing strong semiconductor exports and a base effect from the negative growth (-0.3%) recorded in the fourth quarter of last year. However, with downward pressure on growth mounting due to the Middle East situation, the figure may fall short of the forecast. Some expect the preliminary figure to be close to the original projection, as the Iran war escalated in March and may not be fully reflected in the advance estimate.
The National Data Agency will release the "February Demographic Trends" report on the 22nd. The number of births in January this year was the highest since January 2019, marking a seven-year peak. The increase is attributed to a rise in the population in their 30s — the prime marriage age — and growing marriage numbers, with the upward trend in births expected to continue for some time.
Whether the BOK leadership transition will proceed smoothly is another focus. BOK Governor Rhee Chang-yong steps down on the 20th upon the expiration of his term. The adoption of a confirmation report for his nominated successor, Shin Hyun-song, has been delayed over issues including the illegal issuance of his eldest daughter's passport. The ruling and opposition parties will hold a plenary session of the Finance, Economic Affairs and Planning Committee on the 20th to revisit the adoption of the confirmation report.
In the United States, central bank leadership is also in the spotlight. The Senate Banking Committee will hold a confirmation hearing on the 21st for Warsh, nominee for Fed chair. Republican Senator Thom Tillis, a committee member, has stated that he will oppose Warsh's confirmation until the Justice Department investigation into current Fed Chair Jerome Powell is resolved. The Senate Banking Committee currently consists of 24 members — 13 Republicans and 11 Democrats. A majority is required to approve the nomination after the hearing, but if all Democrats vote against and even one Republican defects, the vote would be tied, potentially derailing the confirmation process. As a result, uncertainty surrounding Warsh's confirmation remains.
Tesla's first-quarter earnings release on the 22nd (local time) is also a key variable for U.S. equity markets. The People's Bank of China will announce its Loan Prime Rate (LPR), which effectively serves as the country's base rate, on the 20th. The current one-year LPR stands at 3% and the five-year at 3.5%, with the market expecting both to remain unchanged for the 11th consecutive month through this month.
