Korea Economic Forecast

Korea Economic Outlook

December 16, 2021

After restrictions and a less favorable base effect triggered a slowdown in growth in Q3, prospects appear brighter in Q4: Industrial production rebounded and retail sales accelerated in October, while consumer confidence improved in the first two months of the quarter as the country saw looser restrictions from 1 November. Externally, exports were buoyant in October–November. That said, headwinds persist as the manufacturing PMI clocked softer expansions in October–November, while business sentiment has deteriorated in the quarter. Meanwhile, a recent surge in Covid-19 cases led to tighter restrictions nationwide from December, which will temper growth in the last month of Q4. Moreover, the first Omicron case in the country was reported in early December, creating further uncertainty around the health situation, which will likely continue to weigh on business confidence.

Korea Economic Growth

GDP should grow at a healthy pace next year. Supportive fiscal spending—as indicated by the 2022 budget—solid private consumption and a buoyant external sector should be the key drivers of growth. That said, the normalization of monetary policy amid indebted households and rising Omicron cases pose downside risks. FocusEconomics panelists see GDP growth at 3.0% in 2022, which is down 0.1 percentage points from the previous month’s forecast. For 2023, GDP is seen expanding 2.6%.

Korea Economy Data

2015 2016 2017 2018 2019
Population (million)51.051.251.451.651.8
GDP per capita (USD)28,72329,27331,55533,39131,731
GDP (USD bn)1,4651,5001,6241,7251,646
Economic Growth (GDP, annual variation in %)2.82.93.22.92.0
Consumption (annual variation in %)2.22.62.83.21.7
Investment (annual variation in %)5.46.69.8-2.2-2.8
Industrial Production (annual variation in %)-0.32.22.71.6-0.1
Retail Sales (annual variation in %)2.43.93.75.61.8
Unemployment Rate3.63.73.73.83.8
Fiscal Balance (% of GDP)0.01.01.31.6-0.6
Public Debt (% of GDP)37.337.636.737.940.7
Money (annual variation in %)8.27.15.16.77.9
Inflation Rate (CPI, annual variation in %, eop)1.11.31.41.30.7
Inflation Rate (CPI, annual variation in %)0.71.01.91.50.4
Inflation (PPI, annual variation in %)-4.0-1.83.51.90.0
Policy Interest Rate (%)1.501.251.501.751.25
Stock Market (annual variation in %)2.43.321.8-17.37.7
Exchange Rate (vs USD, aop)1,1321,1601,1311,1001,166
Exchange Rate (vs USD)1,1731,2081,0711,1161,156
Current Account (% of GDP)7.26.54.64.53.6
Current Account Balance (USD bn)10597.975.277.560.0
Trade Balance (USD billion)90.389.295.269.738.9
Exports (USD billion)527495574605542
Imports (USD billion)436406478535503
Exports (annual variation in %)-8.0-5.915.85.4-10.4
Imports (annual variation in %)-16.9-6.917.811.9-6.0
International Reserves (USD)368371389404409
External Debt (% of GDP)27.025.525.425.628.4

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Korea Facts

Value Change Date
Bond Yield1.681.55 %Dec 31
Exchange Rate1,1560.21 %Dec 31

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