Korea Economic Forecast

Korea Economic Outlook

October 16, 2018

The economy appeared to decelerate in the third quarter. Consumer and business confidence trended lower in Q3 compared to the second quarter. Moreover, the merchandise trade surplus shrank in Q3 compared to the same quarter a year earlier due to higher energy imports. This comes after economic growth held steady for the second consecutive quarter in Q2. Meanwhile, the government announced new measures to limit house price growth in early September, after household debt growth continued to significantly outstrip income growth in recent months. These include restrictions on mortgage lending and scrapping tax incentives for owning multiple homes. On the diplomatic front, President Moon Jae-in and the leader of North Korea agreed on 19 September to take steps to reduce the risk of war, increase economic cooperation and achieve denuclearization on the Korean peninsula

Korea Economic Growth

Economic growth should remain broadly steady next year. Higher government spending should boost activity. Moreover, although monetary policy is set to tighten slightly, it will remain accommodative by historical standards. Elevated household debt, rising global trade protectionism, higher oil prices and an economic slowdown in China, however, weigh on prospects. Met the why particular panelists forecast the economy will grow 2.7% in 2019, which is unchanged from last month’s forecast, and 2.6% in 2020.

Korea Economy Data

Population (million)50.450.751.051.251.5
GDP per capita (USD)25,89627,81527,09627,60829,745
GDP (USD bn)1,3061,4121,3821,4151,531
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)
Investment (annual variation in %)
Industrial Production (annual variation in %)0.70.3-
Retail Sales (annual variation in %)
Unemployment Rate3.
Fiscal Balance (% of GDP)
Public Debt (% of GDP)35.437.339.511.039.8
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)-1.6-0.5-4.0-1.83.5
Policy Interest Rate (%)2.502.001.501.251.50
Stock Market (annual variation in %)0.7-
Exchange Rate (vs USD, aop)1,0951,0531,1321,1601,131
Exchange Rate (vs USD)1,0551,0991,1731,2081,071
Current Account (% of GDP)
Current Account Balance (USD bn)81.184.411699.278.5
Trade Balance (USD billion)
Exports (USD billion)560573527495574
Imports (USD billion)516526436116478
Exports (annual variation in %)2.12.3-8.0-5.915.8
Imports (annual variation in %)-0.81.9-16.9-6.917.8
International Reserves (USD)346364368371389
External Debt (% of GDP)32.430.128.727.227.4

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Korea Facts

Bond Yield2.291.55 %Oct 18
Exchange Rate1,1350.21 %Oct 18
Stock Market2,148-0.11 %Oct 18

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