Serious concerns are being raised about weak domestic consumption following the December 3 emergency martial law. Consumer sentiment has contracted more sharply than during past periods of political instability, and elevated exchange rates are also emerging as a major obstacle to domestic consumption recovery. The government plans to inject stimulus into domestic recovery through early budget execution in the first half of the year, but experts have raised the necessity for supplementary budget provisions or monetary policy easing. Consumption revitalization policies such as designating temporary holidays are also facing controversy. Ultimately, analysts suggest that rate cuts by the Bank of Korea may be necessary to boost economic activity.
