Korea Economic Forecast

Korea Economic Outlook

February 20, 2018

Economic growth slowed in the fourth quarter of last year, after reaching a nearly four-year high in the third quarter. According to preliminary data released by the Bank of Korea, year-on-year growth decelerated to 3.0% in the fourth quarter, down from 3.8% in the third. Overall, the economy expanded 3.1% in 2017, higher than 2.8% in 2016. In Q4, fewer exports and weaker fixed investment slowed growth, even though private and government consumption dynamics were positive. Indications from January bode well for Q1: Exports grew thanks to strong shipments of semiconductors; improved operating conditions were signaled in the manufacturing sector as businesses reported stronger domestic and overseas demand; and consumer confidence was high in the month. Meanwhile, the ongoing PyeongChang Winter Olympics have led to an apparent warming in relations between North and South Korea, although it remains to be seen if this will translate into reduced geopolitical tension on the peninsula.

Korea Economic Growth

The economy is expected to be supported by increased government spending, a healthy global economy and a boost from the PyeongChang Winter Olympics this year. However, recent government measures to tame housing prices and household debt could weigh on the short-term growth outlook. FocusEconomics panelists forecast economic growth of 2.9% in 2018, which is down 0.1 percentage point from last month’s forecast. In 2019, they foresee an expansion of 2.8%.

Korea Economy Data

Population (million)
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 %)
Consumption (annual variation in %)
Investment (annual variation in %)-
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate3.
Fiscal Balance (% of GDP)
Public Debt (% of GDP)32.133.835.937.838.6
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
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-
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)
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 %)-
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

Bond Yield2.701.55 %Mar 15
Exchange Rate1,0660.21 %Mar 15
Stock Market2,492-0.40 %Mar 15

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