Korea Economic Forecast

Korea Economic Outlook

November 14, 2017

The economy steamed ahead in Q3, according to preliminary data released by the Bank of Korea. Growth came in at 3.6% compared to the same quarter last year, higher than the 2.7% growth recorded for Q2. A jump in exports, coupled with an increase in government spending, propelled the economy in the third quarter. Kicking off Q4, consumer and business confidence were strong in October and November, respectively, and the underlying health of export growth was also strong in October. On 31 October, Korea and China agreed to improve diplomatic relations, which could lead to a recovery in tourism exports next year since they have suffered from the deterioration in relations between the two countries following the deployment of the THAAD missile system in Korea earlier this year. On 7 November, during his visit to Korea, U.S. President Trump called to push ahead with amendment negotiations for the U.S.-Korea free-trade agreement. President Trump’s visit was part of a wider tour of East Asia, in which he pushed for greater regional unity regarding North Korea.

Korea Economic Growth

The 2018 budget, which includes an increase in spending, and improved diplomatic relations with China should buoy economic growth next year. However, measures to cool the housing market could weigh on the outlook. FocusEconomics panelists expect GDP to expand 2.8% in 2018, which is up 0.1 percentage points from last month’s forecast. In 2019, the economy is forecast to grow 2.7%.

Korea Economy Data

20122013201420152016
Population (million)50.050.250.451.051.2
GDP per capita (USD)24,54326,00426,81327,09627,535
GDP (USD bn)1,2271,3061,3521,3821,411
Economic Growth (GDP, annual variation in %)2.32.93.32.82.8
Consumption (annual variation in %)1.91.91.82.22.5
Investment (annual variation in %)-0.53.33.45.15.2
Industrial Production (annual variation in %)1.50.70.3-0.31.0
Retail Sales (annual variation in %)4.41.12.12.44.3
Unemployment Rate3.23.13.53.63.7
Fiscal Balance (% of GDP)1.31.00.60.01.0
Public Debt (% of GDP)32.133.835.937.838.6
Money (annual variation in %)4.84.68.18.27.1
Inflation Rate (CPI, annual variation in %, eop)1.41.10.81.11.3
Inflation Rate (CPI, annual variation in %)2.21.31.30.71.0
Inflation (PPI, annual variation in %)0.7-1.6-0.5-4.0-1.8
Policy Interest Rate (%)2.752.502.001.501.25
Stock Market (annual variation in %)9.40.7-4.82.43.3
Exchange Rate (vs USD, aop)1,1271,0951,0531,1321,160
Exchange Rate (vs USD)1,0711,0551,0991,1731,208
Current Account (% of GDP)4.16.26.07.77.0
Current Account Balance (USD bn)50.881.184.410698.7
Trade Balance (USD billion)28.344.047.290.389.2
Exports (USD billion)548560573527495
Imports (USD billion)520516526436406
Exports (annual variation in %)-1.32.12.3-8.0-5.9
Imports (annual variation in %)-0.9-0.81.9-16.9-6.9
International Reserves (USD)327346364368371
External Debt (% of GDP)33.332.431.428.727.0

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Korea Facts

ValueChangeDate
Bond Yield2.471.55 %Dec 06
Exchange Rate1,0940.21 %Dec 06
Stock Market2,474-0.40 %Dec 06

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