Korea Economic Forecast

Korea Economic Outlook

December 13, 2018

Comprehensive data released in December highlighted that annual economic growth decelerated significantly in the third quarter compared to the second quarter, although this was partly due to a high base effect. The slowdown in Q3 was most evident in fixed investment. In terms of the fourth and final quarter of 2018, the economy has shown mixed signs so far. In December, the Bank of Korea’s business confidence survey posted the most pessimistic reading since January 2017, boding poorly for fixed investment. Furthermore, consumer confidence was pessimistic in both October and November and was at its most downbeat since February 2017 in the latter, which hints at mild private consumption growth. On the plus side, however, the unemployment rate ticked down for a second consecutive month in October, while industrial production rebounded.

Korea Economic Growth

Turning to next year, higher government spending should support economic activity. Moreover, although monetary policy will be tighter, it will remain accommodative by historical standards. However, significant global trade tensions, an economic slowdown in China and elevated domestic household debt threaten the outlook. FocusEconomics panelists forecast the economy will grow 2.6% in 2019, which is unchanged from last month’s forecast, and 2.5% 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 Yield1.981.55 %Jan 16
Exchange Rate1,1200.21 %Jan 16
Stock Market2,106-0.40 %Jan 16

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