Korea Economic Forecast

Korea Economic Outlook

July 17, 2018

The economy’s performance has been solid in recent months, following robust GDP growth in the first quarter, although there appear to be warning signs. Through to June of this year, economic confidence among consumers has remained in optimistic territory, underpinned by positive outlooks regarding income, spending and living standards. However, optimism hit its lowest point in over a year in June. Moreover, in the same month, business activity in the manufacturing sector decreased for the fourth consecutive month, according to survey data. Meanwhile, local elections were held on 13 June, which boosted President Moon Jae-In’s political standing. His party won 11 out of the 12 National Assembly seats in the by-elections, and 14 out of the 17 races for mayor or governor. Although Moon Jae-In will still head a minority government, this result will help his political and economic agenda progress, which includes taming conglomerate power over business and improving labor conditions.

Korea Economic Growth

Increased government spending, together with the possibility of reduced geopolitical tensions on the Korean peninsula, should support economic activity in 2018. However, elevated household debt, government measures to tame housing prices, rising global trade tensions, higher oil prices and signs of a slowdown in China all represent downside risks. FocusEconomics panelists forecast the economy will grow 2.9% this year, which is unchanged from last month’s forecast, and 2.8% in 2019.

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)35.437.339.540.039.8
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)81.184.410699.278.5
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)32.430.128.727.227.4

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Korea Facts

ValueChangeDate
Bond Yield2.501.55 %Aug 14
Exchange Rate1,1280.21 %Aug 15
Stock Market2,259-0.40 %Aug 14

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