Korea Economic Forecast

Korea Economic Outlook

May 21, 2019

The economy had a sluggish start to the year. In the first quarter, output grew at the slowest pace since the financial crisis, on the back of a fall in fixed investment. Particularly, business investment plunged owing to weakness in the semiconductor industry. Government consumption, however, grew robustly and the external sector contributed the most to economic growth in six years, although only thanks to lower imports. More recently, the economy has showed tentative signs of a small rebound in Q2: In April, the manufacturing sector narrowly expanded for the first time in six months and consumers became optimistic about economic conditions for the first time in seven months. Merchandise exports, however, fell for the fifth month running in April. Meanwhile, in the political arena, the government unveiled USD 5.9 billion in extra spending measures on 23 April, which should slightly lift growth later this year.

Korea Economic Growth

The economy is seen flagging slightly this year due to weaker job creation and rising household debt stunting private consumption growth. Moreover, fixed investment will likely continue to fall and global trade tensions will undermine the external sector. On the other hand, significantly higher government spending will support the economy. FocusEconomics panelists forecast the economy will grow 2.3% in 2019, which is down 0.2 percentage points from last month’s forecast, and 2.4% in 2020.

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
Fiscal Balance (% of GDP)1.00.60.01.01.4
Public Debt (% of GDP)35.437.339.540.039.8
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 Yield1.591.55 %Jun 14
Exchange Rate1,1850.21 %Jun 14
Stock Market2,095-0.40 %Jun 14

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