OECD Korea Growth Estimate: Ideas Later.

OECD lifts Korea's 2026 growth forecast from 1.7% to 2.6% amid semiconductor surge

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Containers for export are stacked at Pyeongtaek Port in Gyeonggi Province, May 8. Yonhap

The OECD significantly upgraded its growth outlook for the Korean economy this year, raising the forecast to 2.6 percent from 1.7 percent on expectations that booming semiconductor exports will outweigh risks stemming from the Middle East conflict, according to the Ministry of Finance and Economy, Wednesday.

The ministry said Korea recorded the largest upward revision among G20 economies in the OECD’s latest projections.

After lowering Korea’s growth outlook to 1.7 percent from 2.1 percent in its March report over concerns about the Middle East conflict, the OECD has now reversed course with a substantially more optimistic assessment.

The sharp upward revision appears to reflect Korea’s stronger-than-anticipated economic performance in the first quarter. According to preliminary data released by the Bank of Korea (BOK), real gross domestic product (GDP) expanded 1.7 percent from the previous quarter.

The OECD’s new forecast is in line with the BOK’s latest projection announced last month and stands slightly above the Korea Development Institute’s 2.5 percent estimate. It remains below the Korea Institute of Finance’s 2.8 percent outlook.

Pointing to semiconductors as the key growth driver, the OECD said Korea has seen a sharp rise in exports since the start of the year, with both export prices and shipment volumes posting solid gains.

The organization also forecast continued strength in private investment, led by semiconductor-related spending, with the momentum expected to spread to broader industries later this year.

Despite the improved outlook, the OECD warned of several downside risks facing the Korean economy, citing potential supply disruptions linked to tensions in the Middle East and labor unrest in industrial sectors.

Additionally, the organization projected the country's consumer inflation to average 2.6 percent this year before easing to 2.2 percent next year.

“The OECD assessed long-term inflation expectations as remaining stable and viewed government measures such as price controls and fuel tax reductions as effective in easing inflationary pressure caused by energy supply disruptions,” a ministry official said. “At the same time, the OECD warned that these policies could prolong inflationary pressure and therefore advised that they be withdrawn gradually.”

Meanwhile, the OECD trimmed its global growth forecast by 0.1 percentage point to 2.8 percent while leaving its G20 outlook unchanged at 3.0 percent.

The OECD attributed the downward revision in its global growth outlook to mounting pressure from rising energy prices and disruptions to global trade following the closure of the Strait of Hormuz.

With the recent spike in energy costs linked to the Middle East conflict, the organization projected inflation among G20 economies at 4.0 percent this year and 3.1 percent next year.

Article source:  https://www.koreatimes.co.kr/economy/others/20260603/oecd-lifts-koreas-2026-growth-forecast-from-17-to-26-amid-semiconductor-surge

South Korea Consumer Prices: Ideas Later.

Consumer prices hit 26-month high, fueling rate hike expectations

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BOK sees inflation remaining above 3% amid prolonged Middle East tensions

Korea's consumer inflation accelerated to a 26-month high in May, driven by soaring oil prices amid the ongoing conflict in the Middle East, reinforcing market expectations that the Bank of Korea (BOK) could raise the base rate in July, market watchers said Tuesday.

Consumer prices, a key gauge of inflation, rose 3.1 percent last month from a year earlier, marking the fastest pace of growth since March 2024, according to data released by the Ministry of Data and Statistics.

The increase was largely driven by higher energy costs.

Prices of industrial goods rose 4.2 percent from a year earlier, while petroleum product prices jumped 24.2 percent, contributing 0.92 percentage points to overall inflation. This marked the steepest increase since a 35.2 percent surge recorded in 2022, following Russia's invasion of Ukraine.

The statistics ministry attributed the rise in consumer prices to a rebound in agricultural, livestock and fisheries product prices, as well as soaring oil costs linked to the conflict in the Middle East.

Market analysts said the stronger-than-expected inflation trend, coupled with the BOK's increasingly hawkish rhetoric, has strengthened the case for a rate hike in the coming months.

The central bank left its benchmark interest rate unchanged at 2.5 percent at its Monetary Policy Board meeting last Thursday, but signaled a more hawkish stance.

BOK Gov. Shin Hyun-song reinforced that message on Monday, saying Korea's stronger-than-expected economic growth poses "fewer impediments" to adjusting monetary policy in response to inflationary pressures.

"(Strong economic growth) gives us a lot more leeway to conduct monetary policy in an effective way to address inflation," Shin said.

Market expectations are growing that the central bank could begin raising interest rates as early as next month.

Park Seok-gil, an analyst at JP Morgan, projected 0.25 percentage-point rate hikes in July and October this year, followed by January and April next year.

"While growth is still led by the tech sector, spillover effects to domestic demand are expected, and demand-side inflation pressures are now being considered a major change," Park said.

Fitch Group also revised its outlook, saying it now expects the central bank to begin its tightening cycle in July and deliver two 0.25 percentage-point rate hikes, bringing the policy rate to 3 percent this year. The forecast marks a shift from its previous view that the BOK would wait until the fourth quarter to start raising rates.

Article source:  https://www.koreatimes.co.kr/economy/20260602/consumer-prices-hit-26-month-high-fueling-rate-hike-expectations

Japan Capital Spending: Jan.- March: Ideas Later.

Japan's capital spending in Jan.-March flat on year

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TOKYO (Kyodo) -- Capital spending by Japanese companies in the January-March quarter was almost flat from a year earlier, in a sign growth led by artificial intelligence-linked investment has slowed, government data showed Monday, as the Middle East conflict further clouds the outlook.

Investment by all nonfinancial sectors for purposes such as building plants and purchasing equipment edged up 0.047 percent from a year earlier to 18.81 trillion yen ($118 billion), a record-high, for the fifth straight quarterly gain, the Finance Ministry said.

Declines in the manufacturing sector, including of information and communication electronics equipment, were offset by gains among nonmanufacturers led by goods rental and leasing, the data showed.

A Finance Ministry official said that for the latest data, no significant impact from the Middle East conflict was observed but added that the government will continue to closely monitor the developments as well as movements in the financial markets.

Tensions in the Middle East have disrupted oil supply and petroleum products to the resource-poor country amid the effective closure of the Strait of Hormuz, with economic indicators showing consumer sentiment worsening.

The United States and Israel launched attacks on Iran on Feb. 28.

In the first quarter of 2026, pretax profits jumped 14.6 percent to 32.63 trillion yen, logging a rise for the sixth straight quarter, with profits by manufacturers of memory and other semiconductor-related devices surging 174.7 percent from a year earlier, it said.

Sales gained 1.1 percent to an all-time high of 408.66 trillion yen, on the back of robust manufacturing demand for AI, data centers and factory automation, it said.

The latest figures will be used to revise Japan's gross domestic product data for the January-March period, which showed the economy grew an annualized real 2.1 percent, marking the second straight quarterly expansion.

Based on the latest data, Takeshi Minami, chief economist at the Norinchukin Research Institute, said he estimates that the Cabinet Office's revised GDP data, to be released on June 8, will likely show a cut in economic growth to an annualized 1.3 percent on a larger fall in private investments.

"For the April-June period, economic growth will likely slow down as the Middle East conflict deteriorates consumer sentiment and is expected to weigh on exports, even as real wages are rising from the year earlier on a slowdown in the increase in consumer prices," he said.

Article source: https://mainichi.jp/english/articles/20260601/p2g/00m/0bu/015000c

Japan Firms and Supply Chains: Ideas Later.

Nearly half of Japanese firms lack supply-chain resilience measures

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TOKYO (Kyodo) -- Nearly half of Japanese companies have not implemented measures to protect their supply chains against disasters and global tensions, according to a recent Cabinet Office survey, raising the risk that factory or logistic shutdowns could halt production and impact the broader economy.

In a survey of 1,759 firms conducted between November and December, only 25.9 percent said they had measures in place to strengthen their supply chains.

Supply chain disruptions have recently prompted some food companies to change the packaging of their products because of concerns over naphtha supplies linked to worsening Middle East tensions.

Japan is prone to natural disasters with major earthquakes having disrupted production in the past.

The government plans to encourage companies to take measures, such as diversifying suppliers and dispersing production sites. A Cabinet Office official said more efforts are needed to "keep economic activity from stopping."

By company size, 26.8 percent of large companies with 1 billion yen ($6.2 million) or more in capital, 49.6 percent of midsize firms and 56.3 percent of smaller firms said they had taken no steps, the survey showed.

It also found larger firms were more likely to adopt measures to strengthen supply chains. Some 45.0 percent for large firms have carried out such steps, compared with 23.2 percent for midsize firms and 21.8 percent for smaller firms.

Among firms that said they were taking steps or were considering them, 57.9 percent cited "diversifying suppliers" as their most common measure. "Risk communication with suppliers" and "cooperation among companies and mutual support" followed, the survey showed.

Article source:  https://mainichi.jp/english/articles/20260601/p2g/00m/0bu/004000c

Japan April Jobless Rate: Ideas Later.

Japan's April jobless rate falls to 2.5%, 1st improvement in 2 months

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TOKYO (Kyodo) -- Japan's unemployment rate in April fell to 2.5 percent from 2.7 percent in the previous month, improving for the first time in two months, as many workers switched jobs with the start of the new business year, government data showed Friday.

The number of people with jobs edged up 0.9 percent to a seasonally adjusted 68.76 million, the Ministry of Internal Affairs and Communications said.

Of those not in work, 430,000 were dismissed, while 790,000 people left their jobs voluntarily, typically to seek better conditions, both unchanged from March.

Those newly seeking jobs decreased 10.9 percent to 490,000, according to the ministry.

"The employment situation remains solid," a ministry official said, noting many people likely changed jobs around the start of the new fiscal year in April, while others who had previously not been working newly entered the workforce.

He added that some individuals may have secured their next jobs by year-end and resigned after collecting their winter bonuses in December, remaining out of the labor force until starting at their new workplaces in April.

The data seems to indicate that there has been a "fairly significant level of job changing," the official said.

The job availability ratio was unchanged from March at 1.18 in the reporting month, meaning there were 118 jobs available for every 100 job seekers, according to separate data.

Of the 11 sectors, education and manufacturing saw more new job openings than a year earlier, up 1.5 percent and 1.2 percent, respectively, according to the Ministry of Health, Labor and Welfare.

The rest reported declines, led by the wholesale and retail sector that saw a plunge of 11.0 percent.

There were 9.1 percent fewer job offers in accommodation and restaurant services, while new job openings fell 7.3 percent in information and communications.

Article source:  https://mainichi.jp/english/articles/20260529/p2g/00m/0bu/022000c

Japan Food Price Hikes: Updated June 2, 2026.

Japan faces price hikes on more than 1,000 food items in June

Ideas

Not many years ago many Japanese food companies, and Japanese companies in general, were very reluctant to pass-on their increased costs to the next in the supply chain which eventually included the final retail customer.

But as profits margins of Japanese companies have become small and smaller now, whether good of not so good, they have to think about the share-holders if they are publicly traded company which many of them are now.

Companies in the past, for the most part, focused more on being customer centric and even employee centric and if they had a quarter or two of less than good earnings they were always focused on the future and not the immediate present, as market share was the most important metric for them for a very long time.

Japanese companies again, maybe want to be employee and customer centric, meaning think of employees and customers as stakeholders and not as commodities like maybe in the US, but these days its becoming harder and harder for Japanese companies to do what they used to do for many decades as external forces are forcing them to think much differently than they used to.

Companies are not increasing prices due to consumer demand and that might be good thing but they are increasing prices due to increased energy costs, increased raw material costs, and increased labor costs as now, due to the supposed labor shortage they need to increase wages to either keep their existing employees or attract new employees to their company.

If consumer demand were high, then it would be logical for some or many companies to increase prices to take advantage of the increase in consumer demand, but unfortunately consumer demand in Japan, these days, just isn't enough to see many companies increasing prices because of demand for their products.

The Middle East situation has affected most global supply chains and global products for almost every country and there doesn't seem to be any end in site and when in does end it is estimated to take a least six more months to get the supply chain networks back to some kind of normal or at least as new normal for now.

So for now, Japan and other countries need to find alternatives to using naphtha type products or other ways to wrap or store food products such as stores that use plastic packaging, which I'm sure there is some company now working on just that idea in Japan or globally too.

Japan is a very resource-poor country which means it has to import much of what it needs and on top of that Japan, for the most part, has become more cosmopolitan and imports many other foreign products into Japan that Japanese families and consumers want and need everyday now.

Increased prices in the US its almost a given as companies don't think twice about increasing prices as they are very much share-holder centric which means they unfortunately only care about their quarterly earnings and they are never really focused on the long-term view like Japanese or even Korean companies are.

So again, in the past Japanese companies were very reluctant to increase prices or pass-on their increased costs to the next in the supply chain and eventually the final customer as they valued the relationships they had to their supply chain partners and their customers and being the most important relationships they had along with their employees.

But those days, for many or some companies might be slipping away, as again, more and more external forces are causing Japanese companies to think in a different way and they might feel they have no choice but to increase prices and pass-on their costs to the final retail customer.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260529/p2g/00m/0bu/034000c

Toyota April Export Volume: Ideas Later.

Toyota's April export volume to Middle East plunges 91.7%

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TOKYO (Kyodo) -- Toyota Motor Corp. said Thursday its exports from Japan to the Middle East plunged 91.7 percent in April from a year earlier to 2,418 units amid the conflict in the region.

Toyota's global sales fell 3.1 percent to 849,306 vehicles, marking the third consecutive month of decline, while global output rose 2.0 percent to 831,971 units, a record high for the month.

Its overall exports from Japan sank 7.0 percent to 166,972 vehicles, marking the second straight month of decline.

Overseas sales by the world's largest automaker by volume dropped 7.5 percent to 699,382 units, with sales in the United States declining 4.6 percent to 222,378 vehicles despite continued solid demand for hybrid vehicles in North America.

Sales in the Middle East dipped 33.7 percent to 31,360 vehicles, while those in China saw a 25.4 percent drop to 106,479 cars amid intensifying competition.

However, sales in Japan jumped 24.2 percent to 149,924 units, helped by demand from consumers who had held off purchases ahead of the abolition of the environmental performance tax at the end of March.

Toyota's overseas production climbed 3.8 percent to 567,578 cars, also hitting a record high for the month, with output in India surging 38.5 percent to 33,770 units, reflecting increased operating days.

Output in North America fell 3.3 percent to 198,098 vehicles, while domestic production edged down 1.7 percent to 264,393 units.

Due to prolonged logistical disruptions amid the Middle East crisis, Toyota plans to cut overseas production mainly destined for the region and Asian markets by 83,000 vehicles by around November, according to sources close to the matter.

The automaker also slashed production in Japan for exports to the Middle East by around 40,000 units in total in March and April from its earlier plans.

Meanwhile, global sales by Japan's eight major carmakers, including Toyota, in April fell 1.3 percent from the previous year to 1.94 million vehicles.

Sales by struggling Nissan Motor Co. dropped 7.6 percent to 208,663 cars, while those by Honda Motor Co. declined 7.9 percent to 265,215 vehicles. However, Suzuki Motor Corp. saw a 20.9 percent rise to 309,237 vehicles, supported by strong sales in India.

Global output by the eight automakers totaled 2.00 million vehicles, up 3.2 percent, while domestic production rose 2.4 percent to 651,159 vehicles.

Article source:  https://mainichi.jp/english/articles/20260528/p2g/00m/0bu/030000c