Korea Economic Forecast

Korea Economic Outlook

May 22, 2018

The economy got off to a good start in 2018. According to preliminary data released by the Bank of Korea, GDP growth was unchanged in the first quarter from the previous quarter, indicating that growth momentum was sustained. Despite increased unemployment and a slight dip in consumer confidence in Q1, resilient private consumption, exceptionally strong government consumption due to increased healthcare spending, and solid fixed investment more than outweighed the external sector’s drag on growth in the quarter. At the start of the second quarter, however, the economy has flashed warning signs. In April, merchandise exports fell for the first time in 18 months. Although this was primarily due to an adverse base effect, in the same month consumer confidence decreased for the fifth consecutive month on concerns over future income and spending levels. This was despite the higher minimum wage, which came into effect in January. Moreover, survey data showed that business activity in the manufacturing sector fell in April.

Korea Economic Growth

The economy should be supported by increased government spending in 2018, along with the possibility of reduced geopolitical tensions on the Korean peninsula. However, high household debt and recent government measures to tame increasing housing prices could weigh on growth prospects. Met the why particular panelists forecast the economy will grow 2.9% in 2018, which is unchanged from last month’s forecast, and 2.9% again in 2019.

Korea Economy Data

20132014201520162017
Population (million)50.250.451.051.251.0
GDP per capita (USD)26,00426,81327,09627,535-  
GDP (USD bn)1,3061,3521,3821,411-  
Economic Growth (GDP, annual variation in %)2.93.32.82.8-  
Consumption (annual variation in %)1.91.82.22.5-  
Investment (annual variation in %)3.33.45.15.2-  
Industrial Production (annual variation in %)0.70.3-0.31.0-  
Retail Sales (annual variation in %)1.12.12.44.3-  
Unemployment Rate3.13.53.63.7-  
Fiscal Balance (% of GDP)1.00.60.01.0-  
Public Debt (% of GDP)33.835.937.838.6-  
Money (annual variation in %)4.68.18.27.1-  
Inflation Rate (CPI, annual variation in %, eop)1.10.81.11.3-  
Inflation Rate (CPI, annual variation in %)1.31.30.71.0-  
Inflation (PPI, annual variation in %)-1.6-0.5-4.0-1.8-  
Policy Interest Rate (%)2.502.001.501.25-  
Stock Market (annual variation in %)0.7-4.82.43.3-  
Exchange Rate (vs USD, aop)1,0951,0531,1321,160-  
Exchange Rate (vs USD)1,0551,0991,1731,208-  
Current Account (% of GDP)6.26.07.77.0-  
Current Account Balance (USD bn)81.184.411698.7-  
Trade Balance (USD billion)44.047.290.389.2-  
Exports (USD billion)560573527495-  
Imports (USD billion)516526436116-  
Exports (annual variation in %)2.12.3-8.0-5.9-  
Imports (annual variation in %)-0.81.9-16.9-6.9-  
International Reserves (USD)346364368371-  
External Debt (% of GDP)32.431.428.727.0-  

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Korea Facts

ValueChangeDate
Bond Yield2.771.55 %May 21
Bond Yield2.771.55 %May 21
Exchange Rate1,0850.21 %May 21
Exchange Rate1,0850.21 %May 21
Stock Market2,466-0.11 %May 21
Stock Market2,466-0.11 %May 21

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