Korea Economic Forecast

Korea Economic Outlook

January 22, 2019

The economy appeared to have regained some momentum in the fourth quarter of 2018, after growth slowed significantly in the third quarter. The unemployment rate averaged slightly lower in Q4 compared to Q3, while merchandise exports accelerated in the same period despite slowing global trade. Public spending seems to have picked up in the same period. That said, additional data suggests that the economy remains far from reaching full potential, with both consumer and business confidence posting weak results throughout Q4. In other news, household lending growth slowed for the second consecutive year in 2018, suggesting that the government’s stricter financing rules are having the desired effect. Nevertheless, the rate of increase in 2018 was still higher than its target.

Korea Economic Growth

Higher government spending should support economic activity this year. Moreover, although monetary policy will be tighter, it will remain accommodative by historical standards. However, an expected slowdown in export growth and high domestic household debt weigh on prospects. Met the why particular panelists forecast the economy will grow 2.5% in 2019, which is down 0.1 percentage points from last month’s forecast, and 2.5% again 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 Yield2.051.55 %Jan 30
Exchange Rate1,1160.21 %Jan 30
Stock Market2,206-0.11 %Jan 30

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