{"id":2208363,"date":"2025-02-13T08:00:44","date_gmt":"2025-02-12T23:00:44","guid":{"rendered":"https:\/\/koreapro.org\/?p=2208363"},"modified":"2025-02-12T14:03:20","modified_gmt":"2025-02-12T05:03:20","slug":"bok-data-signals-economic-slowdown-as-firms-burn-cash-and-trade-pressures-mount","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2025\/02\/bok-data-signals-economic-slowdown-as-firms-burn-cash-and-trade-pressures-mount\/","title":{"rendered":"BOK data signals economic slowdown as firms burn cash and trade pressures mount"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea\u2019s financial markets showed <\/span><a href=\"https:\/\/www.bok.or.kr\/portal\/bbs\/B0000502\/view.do?nttId=10089749&amp;searchCnd=1&amp;searchKwd=&amp;depth2=200038&amp;depth3=201263&amp;depth=201263&amp;pageUnit=10&amp;pageIndex=1&amp;programType=newsData&amp;menuNo=201265&amp;oldMenuNo=201263\"><span style=\"font-weight: 400;\">mixed trends<\/span><\/a><span style=\"font-weight: 400;\"> in January, with corporate lending rebounding while household borrowing remained sluggish, according to the Bank of Korea (BOK) on Wednesday. Large corporate loans surged $4.2 billion (6.1 trillion won), reversing December\u2019s sharp contraction, as companies tapped fresh credit following year-end balance sheet adjustments and seasonal financing needs. Small- and medium-sized enterprise (SME) lending also rose by $1.2 billion (1.8 trillion won), driven by tax payments and holiday-related expenses. However, household borrowing declined for a second straight month, with overall loans falling $344 million (500 billion won) despite a modest pickup in mortgage lending.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Liquidity conditions also diverged. Bank deposits plummeted $22.9 billion (33.3 trillion won), as corporate funds parked for regulatory compliance flowed out and businesses met VAT obligations. Meanwhile, investment funds saw sharp inflows, with Money Market Funds (MMF) rebounding $13.7 billion (19.9 trillion won) after December withdrawals. Bond funds also turned positive by $5.9 billion (8.6 trillion won), reflecting a shift toward safer assets amid market uncertainty. The BOK noted that while market rates initially declined on domestic slowdown concerns, expectations of a delayed U.S. rate cut kept bond yields from falling further.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The BOK\u2019s data points to tightening financial conditions, with businesses borrowing to cover short-term liquidity needs, not expansion. Large firms are taking on new loans after year-end balance sheet adjustments, while SMEs \u2014 typically a barometer of real economic activity \u2014 remain cautious, signaling <\/span><a href=\"https:\/\/koreapro.org\/2025\/01\/morgan-stanley-slashes-south-koreas-2025-growth-outlook-to-1-5\/\"><span style=\"font-weight: 400;\">weak consumer spending<\/span><\/a><span style=\"font-weight: 400;\"> beyond the recent Lunar New Year holidays. Household lending\u2019s continued decline further reflects this negative sentiment as households appear either unwilling or unable to take on more debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The 33.3 trillion won deposit outflow is another warning sign, suggesting businesses are burning through cash reserves to meet obligations rather than reinvesting. Meanwhile, capital is shifting into safe-haven assets, with MMFs and bond funds seeing sharp inflows \u2014 a flight to safety, not confidence.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The bigger risk is U.S. President Donald Trump\u2019s <\/span><a href=\"https:\/\/koreapro.org\/2025\/02\/trumps-tariffs-hit-south-korean-steel-hard-as-us-trade-war-expands\/\"><span style=\"font-weight: 400;\">25% tariffs on steel and aluminum<\/span><\/a><span style=\"font-weight: 400;\">, which are already disrupting global supply chains. Moreover, potential tariffs on semiconductors will directly hit South Korea\u2019s top export sector. Meanwhile, Federal Reserve Chair Jerome Powell <\/span><a href=\"https:\/\/www.federalreserve.gov\/newsevents\/testimony\/powell20250211a.htm\"><span style=\"font-weight: 400;\">signaled<\/span><\/a><span style=\"font-weight: 400;\"> a delay in U.S. rate cuts on Wednesday, adding pressure on global markets. If trade tensions escalate and borrowing costs remain high, the BOK faces a no-win scenario\u2014cut rates and risk capital flight, or hold firm and watch growth stall further.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea\u2019s financial markets showed mixed trends in January, with corporate lending rebounding while household borrowing remained sluggish, according to the Bank of Korea (BOK) on Wednesday. Large corporate loans surged $4.2 billion (6.1 trillion won), reversing December\u2019s sharp contraction, as companies tapped fresh credit following year-end balance sheet adjustments and seasonal financing needs. Small- [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2206740,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2208363","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>BOK data signals economic slowdown as firms burn cash and trade pressures mount - Korea Pro<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2025\/02\/bok-data-signals-economic-slowdown-as-firms-burn-cash-and-trade-pressures-mount\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BOK data signals economic slowdown as firms burn cash and trade pressures mount - Korea Pro\" \/>\n<meta property=\"og:description\" content=\"South Korea\u2019s financial markets showed mixed trends in January, with corporate lending rebounding while household borrowing remained sluggish, according to the Bank of Korea (BOK) on Wednesday. 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