GDP in Korea
Korea - GDP
Economic growth plunges to a near-decade low
According to preliminary data released by the Bank of Korea, the economy grew 1.8% in the first quarter compared to the same quarter a year earlier. This was significantly down from the 3.1% expansion registered in the fourth quarter of last year, weighed on mainly by a notable contraction in gross fixed capital formation and a slowdown in final consumption expenditure growth. In seasonally-adjusted terms, the economy shrank 0.3% in Q1 compared to the previous quarter, contrasting the 1.0% expansion in Q4. All growth figures were worse than market analysts’ expectations.
The worst performer in the first quarter was fixed investment, which posted the sharpest contraction in almost a decade (Q1: -8.4% year-on-year; Q4: -3.8% yoy). Meanwhile, private consumption growth softened to 1.9% in Q1 (Q4: +2.5% yoy), likely the result of an uptick in the unemployment rate and pessimism among consumers. Government consumption growth also slowed, though remained robust at 5.2% (Q4: +7.1% yoy).
Growth in exports of goods and services slumped to a scant 0.2% in Q1, down from the 7.2% rise clocked in Q4. Imports meanwhile fell 5.4% in Q1, contrasting the 2.5% expansion logged in Q4. Consequently, the external sector contributed 3.1 percentage points to economic growth in Q1, up from the 2.5 percentage-point contribution in Q4.
Looking ahead, growth will likely be moderate, as external pressures—chiefly a synchronized global slowdown in demand for technology and the U.S.-Sino trade spat—continue to weigh on exports. The government plans to help boost the economy with a supplementary budget, which is currently awaiting parliamentary approval. However, the stimulus may not be as impactful as the government desires. Chief economist at ING, Robert Carnell, noted, “The government has a KRW 6.7tr stimulus package ready for implementation. They say it could be worth 0.1pp of GDP. That seems about twice as much as is likely”.
The BoK may also add monetary stimulus to keep the economy afloat. Analyst Young Sun Kwon from Nomura argues, “We believe policymakers will coordinate macro policies and thus maintain our out-of-consensus call that the Bank of Korea (BOK) will deliver two 25bp policy rate cuts to 1.25% within 12 months”.
The Central Bank expects the economy to grow 2.5% in 2019. The analysts surveyed by Met the why particular this month expect an expansion of 2.5% in 2019, which is unchanged from last month’s estimate. For 2020, our panel sees an expansion of 2.4%.
Korea - GDP Data
|Economic Growth (GDP, annual variation in %)||2.9||3.3||2.8||2.9||3.1|
5 years of economic forecasts for more than 30 economic indicators.
Korea GDP Chart
Source: Bank of Korea and Met the why particular calculations.
|Bond Yield||1.87||1.55 %||May 13|
|Exchange Rate||1,188||0.21 %||May 13|
|Stock Market||2,079||-0.11 %||May 13|
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May 20, 2019
The Korean won has had a rough ride in recent weeks, trading at KRW 1,191 per USD on 16 May, which marked a 4.8% depreciation from the same day a month earlier and an over two-year low against the greenback. The currency’s woes primarily stem from global events, including China’s announcement on 13 May that it would retaliate against increased U.S. tariffs by raising its own tariffs on USD 60 billion worth of American shipments.
May 2, 2019
Consumer prices rose 0.4% in month-on-month terms in April, contrasting the 0.2% fall registered in March.
May 2, 2019
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and reported by IHS Markit, recovered in April, rising to 50.2 from 48.8 in March.
May 1, 2019
Merchandise exports fell 2.0% over the same month last year in April to a total of USD 48.9 billion, following the 8.2% contraction logged in March (USD 47.1 billion).
April 30, 2019
Industrial production in the mining, manufacturing, and gas and electricity sectors dipped 2.8% over the same month a year prior in March, following the revised 3.4% decline registered in February (previously reported: -2.7% year-on-year).