Korea Economic Forecast

Korea Economic Outlook

February 19, 2019

The economy regained momentum in the fourth quarter of 2018, after growth slowed significantly in the third quarter. Stronger government spending growth, which surged to a near-decade high due to the government’s accommodative fiscal approach, led the upturn. Meanwhile, private consumption expanded at a steady pace and the external sector contributed significantly to the headline reading in Q4. On the other hand, fixed investment fell due to lower investment spending on construction projects. Turning to 2019, the year began on a sour note: In January, the unemployment rate rose to a multi-year high, although consumers were slightly less pessimistic, while merchandise exports fell for the second straight month. Compounding matters, the U.S. could soon hike its automobile import tariffs in the coming months, which would further drag on Korean exports.

Korea Economic Growth

The economy should benefit from higher government spending this year. Moreover, although monetary policy should be tighter, it will likely remain accommodative by historical standards. An expected slowdown in export growth and high domestic household debt weigh on prospects, however. Met the why particular panelists forecast the economy will grow 2.5% in 2019, which is unchanged from last month’s forecast, and 2.5% again 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
Fiscal Balance (% of GDP)1.00.60.01.01.4
Public Debt (% of GDP)35.437.339.511.039.8
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 Yield1.991.55 %Mar 11
Exchange Rate1,1340.21 %Mar 11
Stock Market2,138-0.11 %Mar 11

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