Korea Economic Forecast

Korea Economic Outlook

May 26, 2020

Economic activity remains under siege in the second quarter, with recent data pointing to downbeat domestic and external demand. In April, consumer confidence fell to a one-decade low, while employment levels continued to reel in the same month, boding ill for household spending. Moreover, business confidence in May and the manufacturing PMI for April dipped to the lowest levels since early 2009. On the external front, the trade balance posted the first deficit in over eight years in April as a sharp fall in automobile shipments suppressed exports; in further bad news for the manufacturing industry, exports contracted over 20% in the first 20 days of May. Nevertheless, ample fiscal and monetary stimulus, as well as a solid effort to contain the virus domestically, should help spark a healthy recovery in H2 this year.

Korea Economic Growth

The economy will likely contract notably this year as Covid-19 batters both domestic and external demand. Nevertheless, an accommodative monetary stance and stronger fiscal stimulus should support a speedy recovery in economic activity once the pandemic subsides. Our panel projects the economy will contract 1.1% in 2020, which is down 0.3 percentage points from last month’s forecast, before growing 3.2% in 2021.

Korea Economy Data

2015 2016 2017 2018 2019
Population (million)51.051.251.451.651.8
GDP per capita (USD)28,72329,27331,55533,39131,731
GDP (USD bn)1,4651,5001,6241,7251,646
Economic Growth (GDP, annual variation in %)2.82.93.22.92.0
Consumption (annual variation in %)2.22.62.83.21.7
Investment (annual variation in %)5.46.69.8-2.2-2.8
Industrial Production (annual variation in %)-0.32.22.71.6-0.1
Retail Sales (annual variation in %)2.43.93.75.61.8
Unemployment Rate3.63.73.73.83.8
Fiscal Balance (% of GDP)0.01.01.31.6-0.6
Public Debt (% of GDP)37.337.636.737.940.7
Money (annual variation in %)8.27.15.16.77.9
Inflation Rate (CPI, annual variation in %, eop)1.11.31.41.30.7
Inflation Rate (CPI, annual variation in %)0.71.01.91.50.4
Inflation (PPI, annual variation in %)-4.0-1.83.51.90.0
Policy Interest Rate (%)1.501.251.501.751.25
Stock Market (annual variation in %)2.43.321.8-17.37.7
Exchange Rate (vs USD, aop)1,1321,1601,1311,1001,166
Exchange Rate (vs USD)1,1731,2081,0711,1161,156
Current Account (% of GDP)7.26.54.64.53.6
Current Account Balance (USD bn)10597.975.277.560.0
Trade Balance (USD billion)90.389.295.269.738.9
Exports (USD billion)527495574605542
Imports (USD billion)436406478535503
Exports (annual variation in %)-8.0-5.915.85.4-10.4
Imports (annual variation in %)-16.9-6.917.811.9-6.0
International Reserves (USD)368371389404409
External Debt (% of GDP)27.025.525.425.628.4

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Korea Facts

Value Change Date
Bond Yield1.681.55 %Dec 31
Exchange Rate1,1560.21 %Dec 31

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