Bank of Korea Governor's Confession: 'We Cannot Raise Rates for Fear of a Chain of Defaults' / Real Estate Prices Ruining the Korean Economy | Professor Han Mun-do

Summary

Professor Han Mun-do of Seoul Digital University argues that Korea's economy is caught in a structural dilemma: the won is weak and likely to reach 1,500 per dollar, but the Bank of Korea cannot raise rates because households, self-employed borrowers, and SMEs are too fragile. He says construction PF restructuring is unfinished and poses further risk to construction and securities firms. He also warns that Seoul apartment prices are overstretched, transaction volumes have collapsed, and new purchases should be avoided while the market waits for supply measures.

• Han Mun-do sees USD/KRW likely breaking 1,500 due to structural won weakness.
• He says rate hikes are blocked by fragile households, self-employed borrowers, and SMEs.
• He warns Korean construction PF restructuring is incomplete and securities firms are exposed.
• He reports Seoul apartment transaction volumes falling sharply from prior averages.
• He cites Seoul price-to-rent ratios and low rental yields versus bonds and deposits.
• He advises caution on new Seoul apartment purchases and expects a wait-and-see market.
• He expects more construction and trust company distress, possibly after local elections.