HSBC: THE DIRECT INFLATION EFFECTS OF AI ARE MORE LIKELY TO OCCUR IN KOREA

ON 20 JULY, HSBC ECONOMISTS STATED IN A STUDY THAT AI COULD HAVE A MORE DIRECT INFLATIONARY IMPACT ON KOREA AS AN UPSTREAM HARDWARE SUPPLIER. THEY INDICATED THAT BOTTLENECKS IN HIGH-TECHNOLOGY COMPONENTS AND LOGISTICS WERE PUSHING UP PRODUCER PRICES IN THESE KEY UPSTREAM MARKETS. THEY SAID THAT THE CENTRAL BANK OF KOREA MIGHT HAVE TO TIGHTEN MONETARY POLICY IN RESPONSE TO INFLATION. HSBC EXPECTS THAT, BY THE END OF THIS YEAR, THE CENTRAL BANK OF KOREA WILL HAVE REACHED A FURTHER INCREASE. THEY ADDED THAT, AT THE SAME TIME, THERE WAS A RISK OF FURTHER TIGHTENING POLICIES IN 2027, DEPENDING ON THE EXTENT TO WHICH THE SURGE IN AI EXPORTS WAS CHANNELLED TO LOCAL ECONOMIC ACTIVITIES. KIM XIAN