Air India Boeing 787 Dreamliner crashes, leaving only one person alive, worst air crash in years

This Thursday, an Air India Boeing 787 Dreamliner carrying 242 passengers, originally scheduled to fly to London, crashed seconds after takeoff from the western Indian city of Ahmedabad, resulting in almost all passengers perishing, with only one passenger miraculously surviving. This accident is not only the first crash of a Boeing 787 Dreamliner since its commercial service introduction but also one of the most fatal aviation disasters in recent years.

Boeing 787 Dreamliner: A Long-Haul Aircraft Type Widely Favored by Airlines

As South Korea's economic growth prospects dim, the market is highly focused on whether the central bank will further cut interest rates. Bank of Korea (BOK) Governor Rhee Chang-yong warned that rapid and significant rate cuts could lead to a further surge in housing prices in the Seoul area. He urged the government to gradually move away from relying on monetary easing and expansionary fiscal policies, and shift towards more stable, long-term structural reforms.

Potential Housing Market Bubble from Rapid Interest Rate Cut in South Korea

In his Bank of Korea 75th anniversary memorial speech, Rhee Chang-yong pointed out that a rapid and aggressive benchmark interest rate cut could potentially stimulate another significant price increase in the capital region's housing market. He stated directly: "For a long time, the government has excessively relied on the real estate market as a means to drive short-term economic growth, and this model should now end."

Actual data shows that since March this year, apartment prices in Seoul have increased by about 7% year-on-year, while household loans from banks and financial institutions have also notably increased, indicating that funds are once again flowing into the real estate market.

Korean Won Strengthening Beneficial, but Exchange Rate Remains Uncertain

Rhee Chang-yong also stated that the recent strengthening of the Korean won against the US dollar is a positive development. However, he warned that if the Federal Reserve delays rate cuts, the interest rate differential between Korea and the US could widen, potentially intensifying exchange rate market volatility, especially given the ongoing uncertainty in US-China trade friction and tariff policies.

"These uncertain factors mean we must adopt a more cautious and gradual monetary policy approach," he added.

Bank of Korea in Easing Cycle, but Will Proceed Cautiously

Despite criticism that the Korean central bank is "lagging behind market expectations in the rate-cutting pace", Rhee emphasized that the bank initiated an easing cycle in October last year, having already conducted four 25-basis-point rate cuts. He stated that future rate cuts will depend on changes in macroeconomic and financial data.

"We certainly understand the severity of the economic situation, but the design and scale of policies must consider Korea's long-standing issues of low growth and stalled structural reforms."

Growth Forecast Revised Down, Exports and Domestic Demand Weakening

South Korea's economic growth forecast has been significantly revised downward. The central bank in May lowered its full-year 2025 GDP growth projection to just 0.8%, substantially lower than the 1.5% estimated in February. This represents the lowest annual growth expectation since the COVID-19 pandemic, the 2000s financial crisis, and the 1990s Asian financial crisis.

Rhee Chang-yong noted that weak exports are the primary cause of this growth slowdown, particularly against the backdrop of ongoing US-China trade disputes. Simultaneously, domestic consumer demand is being dragged down by the continued depression in the construction sector, creating a double impact.

Policy Stimulus Needs Structural Thinking, No Longer Just "Throwing Money"

Regarding the insufficient economic momentum, Rhee believes that while stimulus policies are needed, they can no longer rely solely on rate cuts and supplementary budgets. He emphasized: "The Korean economy has long been constrained by low growth and stalled reforms, so any stimulus measures must be more precise and sustainable."

Currently, the Bank of Korea will continue to observe data trends to decide on further monetary policy relaxation, while also calling on the government to promote fundamental economic reforms to move away from reliance on short-term firefighting strategies.