Korea Economic Forecast

Korea Economic Outlook

April 16, 2019

Recent indicators suggest economic growth decelerated in Q1 2019 amid rising external headwinds. Industrial output fell in January and February, contrasting the growth recorded in Q4 2018 and dragged down by the manufacturing and construction sectors. Similarly in Q1, exports posted the first annual contraction in over two years, while the trade surplus narrowed. Moreover, the labor market has softened somewhat, with the unemployment rate averaging higher year-on-year. On 2 April, the government announced that it will present a supplementary budget later this month to strengthen job creation and ailing exports, which should provide a boost to the economy in the remainder of the year. A day later, Korean mobile carriers launched 5G services; Korean leadership in this field bodes well for long-run economic competitiveness and investment.

Korea Economic Growth

The economy is seen flagging slightly this year due to weaker job creation and rising household debt stunting private consumption growth, while fixed investment will likely continue to subside. On the other hand, significantly higher government spending will support the economy, and progress on U.S.-China trade negotiations would bolster external demand. Met the why particular panelists forecast the economy will grow 2.5% in 2019, which is unchanged from last month’s forecast, and 2.4% in 2020.

Korea Economy Data

20132014201520162017
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 %)2.93.32.82.93.1
Consumption (annual variation in %)1.91.82.22.52.6
Investment (annual variation in %)3.33.45.15.68.6
Industrial Production (annual variation in %)0.70.3-0.32.31.9
Retail Sales (annual variation in %)1.02.12.43.93.7
Unemployment Rate3.13.53.63.73.7
Public Debt (% of GDP)35.437.339.511.039.8
Fiscal Balance (% of GDP)1.00.60.01.01.4
Money (annual variation in %)4.68.18.27.15.1
Inflation Rate (CPI, annual variation in %, eop)1.10.81.11.31.5
Inflation Rate (CPI, annual variation in %)1.31.30.71.01.9
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 %)0.7-4.82.43.321.8
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)6.26.07.77.05.1
Current Account Balance (USD bn)81.184.411699.278.5
Trade Balance (USD billion)44.047.290.389.295.2
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

ValueChangeDate
Bond Yield1.871.55 %May 13
Exchange Rate1,1880.21 %May 13
Stock Market2,079-0.11 %May 13

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