Korea Economic Forecast

Korea Economic Outlook

November 12, 2019

Economic growth was stable in the third quarter, as a softer contraction in fixed investment offset a slight deceleration in private consumption growth. Meanwhile, public spending continued to surge, albeit at a marginally softer pace than in the second quarter. Moreover, in the external sector, both exports and imports grew modestly in Q3; however, this resulted in a negative contribution to growth, contrasting the positive contribution in Q2. Shifting focus to the fourth quarter, economic growth again appears more or less steady: Consumer confidence hit a six-month high in October, although merchandise exports contracted in October at a sharper pace than in Q3. Meanwhile, in the diplomatic arena, President Moon Jae-in met his Japanese counterpart in early November. They agreed to thaw frosty bilateral relations, which bodes well for currently suppressed trade flows.

Korea Economic Growth

Growth is projected to accelerate next year as fiscal stimulus—aimed at boosting employment and supporting research and development in areas such as artificial intelligence—should underpin growth. That said, the U.S.-China trade war and uncertainty in the Korea-Japan relationship pose downside risks. FocusEconomics panelists project the economy will grow 2.2% in 2020, which is unchanged from last month’s forecast, and 2.3% in 2021.

Korea Economy Data

20132014201520162017
Population (million)50.450.751.051.251.5
GDP per capita (USD)27,18929,25428,72329,27331,555
GDP (USD bn)1,3711,4851,4651,5001,624
Economic Growth (GDP, annual variation in %)3.23.22.82.93.2
Consumption (annual variation in %)1.72.02.22.62.8
Investment (annual variation in %)2.83.15.46.69.8
Industrial Production (annual variation in %)0.70.3-0.32.22.6
Retail Sales (annual variation in %)1.02.12.43.93.7
Unemployment Rate3.13.53.63.73.7
Public Debt (% of GDP)35.437.339.539.939.8
Fiscal Balance (% of GDP)1.00.50.01.01.3
Money (annual variation in %)4.68.18.27.15.1
Inflation Rate (CPI, annual variation in %, eop)1.10.81.11.31.4
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)5.65.67.26.54.6
Current Account Balance (USD bn)77.383.010597.975.2
Trade Balance (USD billion)44.047.290.389.295.2
Exports (USD billion)560573527495574
Imports (USD billion)516526436406478
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)30.928.627.025.525.4

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Korea Facts

ValueChangeDate
Bond Yield1.341.55 %Sep 04
Exchange Rate1,2080.21 %Sep 04
Stock Market1,989-0.40 %Sep 04

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