South Korean Regulator Commits to Preventing Real Estate Financing RisksSeoul Stock Market Suffers Decline in Late Morning TradingYongsan District in Seoul Set to Transform with 100-Story Skyscraper and Unique Sky TrailOECD Lowers South Korea’s Economic Growth Forecast for 2024 to 2.2%

SEOUL—The Financial Supervisory Service (FSS) of South Korea has pledged to implement measures to prevent the spillover of real estate project financing (PF) risks into the broader financial markets, as stated by the FSS governor Lee Bok-hyun on Monday. Lee emphasized the importance of persuading financial institutions to proactively manage credit risks associated with real estate PF loans, describing these risks as a potential "detonator" for the South Korean economy.

According to Yonhap News Agency, the regulator is focused on encouraging financial companies to enhance their loss-absorption capacities in relation to PF loans. Lee also issued a warning regarding severe consequences for financial institutions that fail to adequately address risks or neglect their responsibilities. This announcement comes in the wake of increased concerns over real estate project financing, particularly after the significant builder Taeyoung Engineering and Construction Co. applied for a debt restructuring program late last year. The FSS highlighted a concerning rise in the delinquency rate on PF loans, which more than doubled to 2.42 percent by the end of September, up from 1.19 percent at the end of 2022.

SEOUL—The South Korean stock market experienced a significant downturn in late Monday morning trading, as investors began selling off shares to capitalize on recent gains. The Korea Composite Stock Price Index (KOSPI) saw a decline of 38.63 points, dropping 1.48 percent to 2,576.68 by 11:20 a.m. Leading the downturn were major chipmakers, with Samsung Electronics, the world's largest semiconductor manufacturer, falling 1.73 percent and SK hynix, its competitor, decreasing by 0.96 percent.

According to Yonhap News Agency, other key industry players also saw declines in their share prices. Kia, the nation's second-largest automaker, dropped 1.92 percent, while its affiliate Hyundai Mobis decreased by 1.51 percent. Furthermore, leading battery manufacturer Samsung SDI saw a 1.02 percent fall, and SK Innovation, the top oil refiner, experienced a 1.53 percent reduction in its share price. Concurrently, the South Korean won depreciated against the U.S. dollar, trading at 1,337.1 won, a decline of 14.5 won from the previous session's close.

SEOUL—The Seoul city government announced on Monday a detailed development plan for transforming an abandoned train maintenance depot in the Yongsan district into a pioneering urban space. The plan includes the construction of a 100-story skyscraper and a unique sky trail linking high-rise buildings, among other innovative features. This initiative aims to convert the 500,000-square-meter site into the world's largest "vertical city," incorporating extensive green spaces from the basement to the rooftops.

According to Yonhap News Agency, the Yongsan International Business District blueprint is set to kickstart infrastructure construction in the second half of 2025, with businesses expected to move in by the early 2030s. This ambitious project, situated near the former USFK compound and the Han River, is designed to be about 4.4 times the size of Hudson Yards in New York, representing the last significant undeveloped land parcel in Seoul.

Originally announced in 2006, the project faced delays primarily due to the 2008 global financial crisis. The renewed plan envisions a compact city where business, residential, and leisure spaces are within walking distance. The international business zone will host a skyscraper with around 100 floors, alongside Class A office buildings, hotels, and a metropolitan transit center, featuring observation and amusement facilities. The business complex zone will include corporate facilities connected by a sky trail, while the business support zone will focus on housing, education, and cultural facilities, including a concert hall, an art museum, and a library, collectively known as the Seoul Art Band.

Furthermore, the project aims to enhance its green space ratio by integrating with the surrounding Han River and Yongsan Park areas, signifying a significant step towards urban regeneration and sustainability.

SEOUL - The Organization for Economic Cooperation and Development (OECD) has adjusted its economic growth forecast for South Korea in 2024 down to 2.2 percent, as reported by Seoul's Ministry of Economy and Finance. This revision represents a slight decrease from the OECD's previous estimate of 2.3 percent announced in November, aligning closely with the projections made by the South Korean government. However, it slightly exceeds the Bank of Korea's (BOK) prediction of 2.1 percent growth for the year.

According to Yonhap News Agency, The updated forecast comes amid expectations of a global economic recovery, with the International Monetary Fund (IMF) last week predicting a 2.3 percent expansion for South Korea in 2024, attributed to stronger-than-anticipated resilience in major global economies. Analysts believe the South Korean economy will see a rebound this year, fueled by increased exports of semiconductors, vehicles, and other key products.

Globally, the OECD has revised its growth forecast upwards by 0.2 percentage points to 2.9 percent, despite noting a deceleration in momentum towards the end of last year. The latest report from the OECD suggests moderate growth in 2024, with global trade showing signs of recovery driven by heightened demand for semiconductors, automobiles, and air travel services. However, the organization cautions that geopolitical tensions in the Middle East, particularly around the Red Sea, could escalate global energy prices and exacerbate supply chain bottlenecks.

Additionally, the report highlights concerns over the impact of high interest rates and their delayed effects on economic performance. The OECD anticipates inflation in South Korea to settle at 2.7 percent this year, with a projection of decreasing to 2.0 percent by 2025. This represents a slowdown from the 3.6 percent inflation rate recorded last year. In contrast, inflation across the Group of 20 nations is expected to rise to 6.6 percent in 2024, up from 6.3 percent the previous year, underscoring the need for continued restrictive monetary policies to control inflation.

The Bank of Korea has maintained its benchmark interest rate at 3.5 percent since January 2023, marking eight consecutive holds. This rate is the highest seen since 2008, reflecting the central bank's cautious approach to managing economic growth and inflation pressures.

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