Macro Forum: The Street View
SOUTH KOREA MACRO INSIGHTS
GDP continued to rise in the third quarter, showing a performance of 3.1% year-on-year, the fastest expansion in five quarters. Looking at 2018 overall however, GDP growth was down, slowing to 2.7% growth, compared to 3.1% previous year.
The ongoing dispute between South Korea’s largest trading partners, USA and China as well as the economic problems currently being faced by China are likely to have a drag on continuing economic growth in South Korea. Exports have fallen 14.6% year-on-year in the early days of 2019. South Korea’s exports to China which make up a quarter of all the country’s overseas shipments fell 14% year-on-year in December.
Inflationary growth has slowed to 1.3% year-on-year, the weakest rate of growth for five months and below the central bank target of 2%. Prices remain subdued due to weak domestic demand caused by concerns over economic growth and unemployment. In the third quarter, the jobless rate rose to 4%, the worst level since 2001.
The benchmark seven day repurchase rate has been held by the Central Bank at 1.75% due to concerns over a slowing economy.
The Stock Exchange has fallen by 17.6% over 2018 on concerns of the US-China trade war and US interest rate increases. Over the same period, the Won has depreciated 5.15% against the dollar.
Real GDP Growth
South Korea FX vs FV
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