Korea Economic Outlook
May 26, 2020Economic activity remains under siege in the second quarter, with recent data pointing to downbeat domestic and external demand. In April, consumer confidence fell to a one-decade low, while employment levels continued to reel in the same month, boding ill for household spending. Moreover, business confidence in May and the manufacturing PMI for April dipped to the lowest levels since early 2009. On the external front, the trade balance posted the first deficit in over eight years in April as a sharp fall in automobile shipments suppressed exports; in further bad news for the manufacturing industry, exports contracted over 20% in the first 20 days of May. Nevertheless, ample fiscal and monetary stimulus, as well as a solid effort to contain the virus domestically, should help spark a healthy recovery in H2 this year.
Korea Economic GrowthThe economy will likely contract notably this year as Covid-19 batters both domestic and external demand. Nevertheless, an accommodative monetary stance and stronger fiscal stimulus should support a speedy recovery in economic activity once the pandemic subsides. Our panel projects the economy will contract 1.1% in 2020, which is down 0.3 percentage points from last month’s forecast, before growing 3.2% in 2021.
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Korea Economic News
July 1, 2020
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) ticked up to 43.4 in June from 41.3 in May, moving slightly closer the 50-threshold that separates an improvement from a deterioration in the manufacturing sector over the previous month. June’s reading was driven by softer contractions in new orders and production, but remained severe nonetheless.
June 30, 2020
The Bank of Korea’s forward-looking business confidence indicator for manufacturers increased to 51 in July from 49 in June.
June 30, 2020
Industrial production fell 9.6% year-on-year in May (April: -5.1% yoy).
June 26, 2020
The Bank of Korea’s composite consumer sentiment index increased to 81.8 in June from 77.6 in May.
June 2, 2020
According to a second GDP release from the Bank of Korea, the economy contracted 1.3% in quarter-on-quarter seasonally-adjusted (qoqsa) terms in the first quarter, contrasting the 1.3% expansion in the final quarter of last year and slightly softer than the first estimate of a 1.4% decline.