Tuesday September 04 2018
South Korea Inflation Rate at 5-Month Low of 1.4%
Statistics Korea l Rida | rida@tradingeconomics.com

South Korea's annual inflation eased to 1.4 percent in August of 2018 from 1.5 percent in the previous three months but slightly above market expectations of 1.3 percent. It was the lowest inflation rate since March, as cost of transport rose at a softer pace while cost of housing & utilities fell.

Year-on-year, inflation eased for: transport (4.6 percent vs 4.7 percent in July); restaurants & hotels (2.6 percent vs 2.7 percent); clothing & footwear (0.6 percent vs 1.3 percent); furnishings, household equipment & routine maintenance (3.1 percent vs 3.5 percent); and alcoholic beverages & tobacco (0.1 percent vs 0.2 percent). In addition, cost fell for: housing, water, electricity, gas & other fuels (-0.8 percent vs 0.8 percent); health (-0.9 percent vs -1 percent); and communications (-1.6 percent from -1.5 percent).

Meantime, inflation was steady for education (at 1.4 percent), while picked up for recreation & culture (0.6 percent vs a flat reading) and miscellaneous goods & services (0.9 percent vs 0.6 percent). Also, prices of food & non-alcoholic beverages increased by 3 percent, twice faster than a 1.5 percent gain in a month earlier. It was the highest food inflation since September 2017. 

Core CPI, which excludes oil and agricultural products, increased by 1 percent, the same as in July. 

For 2018, the Bank of Korea sees inflation at 1.7 percent. 

On a monthly basis, consumer prices went up 0.5 percent, following a 0.2 percent rise in July while  markets estimated 0.4 percent.




Tuesday September 04 2018
South Korea Economy Expands 0.6% QoQ
Bank of Korea | Mario | mario@tradingeconomics.com

The South Korean economy advanced 0.6 percent quarter-on-quarter in the three months to June 2018 after a 1 percent expansion in the previous period and below both market expectations and the preliminary print of 0.7 percent, final data showed. The downwardly revised figure was explained by softer expansions in manufacturing and services and steeper contractions in primary activity and construction when compared to preliminary data, with utilities also rebounding less than the original data showed.

Slower increases were recorded for manufacturing (+0.6 percent vs +1.6 percent in Q1) and services (+0.5 percent vs +1.1 percent), and contractions in primary activity (-2.8 percent vs +6.0 percent) and construction (-3.1 percent vs +2.1 percent), more than offsetting a sharp rebound in utilities (+9.4 percent vs -7.0 percent).

By expenditure, the softer overall growth was explained by a sharp 2.9 percent decline in gross fixed capital formation (vs +2.0 percent), with facilities falling 5.7 percent (vs +3.4 percent); construction 2.1 percent (vs +1.8 percent); and intellectual property rights 0.7 percent (vs +0.3 percent). Also, final consumption expenditure expanded less (0.3 percent after a 1.1 percent expansion in the first quarter), with both private and public spending rising 0.3 percent. Meantime, exports grew only 0.4 percent (vs +4.4 percent) and imports declined 3.0 percent (vs +4.9 percent).

Year-on-year, the economy expanded 2.8 percent, matching the 2.8 percent growth recorded for the previous quarter and slightly below the 2.9 percent preliminary expansion and the final consensus estimate.




Tuesday September 04 2018
South Korea Annual GDP Growth Revised to 2.8%
Bank of Korea | Mario | mario@tradingeconomics.com

The economy of South Korea advanced 2.8 percent year-on-year in the second quarter of 2018, matching the 2.8 percent growth recorded for the previous quarter and slightly below the 2.9 percent preliminary expansion and the final consensus estimate.

On the production side, manufacturing gained steam, expanding 3.2 percent after a 2.7 percent growth in the previous quarter (and vs preliminary 3.3 percent). Also, utilities rebounded sharply, advancing 3.9 percent following a 1.7 percent drop in the first quarter (and vs prel 4.1 percent). Meantime, primary activity moderated (+1.2 percent vs +4.1 percent and vs prel +1.5 percent) and services expanded at a slightly softer pace of 3.0 percent (vs +3.2 percent in Q1 and vs prel +3.1 percent). In contrast, construction fell into contraction and was revised sharply up (-1.6 percent vs +0.2 percent and prel -0.8 percent).

On the expenditure side, exports expanded at a faster pace (+4.8 percent vs +1.6 percent and vs prel +5.2 percent), while imports advanced less (+2.0 percent vs +4.2 percent and vs prel +2.4 percent), adding to overall growth. In contrast, gross fixed formation contracted 1.3 percent after expanding 3.7 percent in the previous quarter (and vs prel -1.1 percent), with construction slipping 1.5 percent (vs +1.8 percent in Q1 and prel -0.7 percent) and facilities dropping 3.0 percent (vs +7.3 percent and vs prel -3.9 percent). In addition, final consumption grew at a softer clip of 3.3 percent (vs +4.0 percent), with private spending rising 2.8 percent (vs +3.5 percent) and public spending increasing 4.8 percent (vs +5.8 percent), all unchanged from preliminary estimates. 

On a quarterly basis, the economy expanded 0.6 percent quarter-on-quarter after a 1 percent expansion in the previous period and below both market expectations and the preliminary print of 0.7 percent.




Monday September 03 2018
South Korea Trade Surplus Widens 4.5% YoY in August
Ministry of Trade, Industry & Energy (MOTIE) | Chusnul Ch Manan | chusnul@tradingeconomics.com

South Korea’s trade surplus increased to USD 6.9 billion in August of 2018 from USD 6.6 billion in the same month of the preceding year, preliminary data showed. Exports rose 8.7 percent year-on-year to a record high for August of USD 51.2 billion while imports went up 9.2 percent to USD 44.3 billion.

In August, exports grew by 8.7 percent to USD 51.2 billion, missing market expectations of a 10.1 percent growth and after a 6.2 percent rise in July. It was the second straight month of growth in outbound shipments amid escalating trade row between China and the US. Exports of semiconductors jumped 31.5 percent, driven by solid sales of high-value memory chips and storage devices in major markets. Also, sales of petrochemical products grew 17 percent, supported by solid demand and higher oil prices. In addition, sales of vehicles resumed to growth, due to a rebound in exports to the US. By contrast, outbound ships tumbled (-71.8 percent), dragged by a slump global demand and a high base effect.
 
Among major trading partners, exports to China, South Korea’s largest trading partner, soared 20.8 percent, marking the 22nd straight month of growth, driven by robust memory chip sales. In addition, sales to the US went up by 1.5 percent, supported by a jump in memory chips, petrochemical goods and vehicles, offsetting weak sales of wireless communications equipment and home appliances. 

Inbound shipments increased by 9.2 percent year-on-year to USD 44.3 billion, slower than a 16.2 percent rise in a month earlier but beating market estimates of a 7.7 percent growth.

Considering the first eight months of 2018, the trade surplus narrowed sharply to USD 49.21 billion from USD 61.8 billion in the same period the prior year.
 




Friday August 31 2018
South Korea Keeps Base Rate Unchanged at 1.5% in August
Bank of Korea l Rida | rida@tradingeconomics.com

The Bank of Korea held its base rate steady at 1.5 percent on August 31st, as widely expected, citing a fragile job market and subdued consumer inflation.

Excerpts from the statement by The Bank of Korea:

The Board considers that the global economy has continued its robust growth. In the global financial markets, some emerging market economies with weak external soundness have seen unease again, including capital outflows and sharp depreciations of their currencies. Looking ahead the Board sees global economic growth as likely to be affected by factors such as the movements toward spreading trade protectionism, the paces of monetary policy normalization in major countries, and the directions of the US government's economic policies.

The Board judges that the solid trend of domestic economic growth has continued, as consumption and exports have shown favorable movements although the adjustments in facilities and construction investment have persisted. Employment conditions have become more sluggish, with the extent of increase in the number of persons employed having lessened significantly. Going forward the Board expects domestic economic growth to be generally consistent with the path projected in July and sustain a rate at its potential level. It anticipates that investment will slow but that the trend of steady increase in consumption will continue, and that exports will also sustain their favorable movements thanks to the buoyancy of the global economy.

Consumer price inflation has remained at the mid-1 percent as the increases in service fees and agricultural product prices have slowed, despite the accelerating pace of increase in the prices of petroleum products. Core inflation (with food and energy product prices excluded from the CPI) has fallen to the 1 percent, and the rate of inflation expected by the general public has been in the mid- to upper-2 percent range. Looking ahead it is forecast that consumer price inflation, after remaining in the mid-1 percent range for some time, will pick up and gradually approach the target level. Core inflation will also gradually rise.

The domestic financial markets have been generally stable. Long-term market interest rates have fallen, affected by the financial unease in some emerging market economies and the sluggishness of employment. Stock prices had declined, due mainly to concerns about the US-China trade dispute, but have since rebounded as these concerns have eased somewhat. The Korean won-US dollar exchange rate has fluctuated in line with changes in the value of the dollar globally. Household lending has sustained its higher rate of expansion than in past years, although the amount of its expansion has lessened somewhat. Housing sales prices have remained steady overall, but have risen rapidly in some parts of Seoul and its surrounding areas.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability. As it is forecast that inflationary pressures on the demand side will not be high for the time being, while the domestic economy is expected to continue its solid growth, the Board will maintain its accommodative monetary policy stance. In this process it will judge carefully whether it is necessary to adjust its accommodative monetary policy stance further, while closely checking future economic growth and inflation trends. It will also carefully monitor conditions related to trade with major countries, any changes in the monetary policies of major countries, financial and economic conditions in emerging market economies, the trend of increase in household debt, and geopolitical risks.




Wednesday August 01 2018
South Korea July Inflation Rate Steady at 1.5% for 3rd Month
Statistics Korea l Rida | rida@tradingeconomics.com

South Korea's consumer price inflation stood at 1.5 percent year-on-year in July of 2018, the same as in the previous two months and below market expectations of 1.7 percent. Food inflation slowed to a four-month low while cost rose at a faster pace for housing & utilities and transport.

In July, prices of food & non-alcoholic beverages increased by 1.5 percent, compared to a 1.8 percent in a month earlier. It was the lowest food inflation since March. Also, cost rose less for miscellaneous goods & services (0.6 percent from 1 percent in June), while increased at a faster pace for: housing, water, electricity, gas & other fuels (0.8 percent from 0.6 percent); clothing & footwear (1.3 percent from 0.7 percent); furnishings, household equipment & routine maintenance (3.5 percent from 1.8 percent); and transport (4.7 percent from 4.1 percent).

Meantime, inflation was steady for alcoholic beverages & tobacco (0.2 percent); education (1.4 percent); and restaurants & hotels (2.7 percent); while cost was flat for recreation & culture (from  1.2 percent). On the other hand, cost fell for health (-1 percent from 0.1 percent) and communications (-1.5 percent from -0.6 percent).

Core CPI, which excludes oil and agricultural products, increased by 1 percent, after a 1.2 percent gain in June. 

For 2018, the Bank of Korea sees inflation at 1.7 percent. 

On a monthly basis, consumer prices went up 0.2 percent, following a 0.2 percent drop in June. 


Wednesday August 01 2018
South Korea Trade Surplus Narrows 31.4% YoY in July
Rida | rida@tradingeconomics.com

South Korea’s trade surplus decreased to USD 7.0 billion in July of 2018 from USD 10.2 billion in the same month of the preceding year, as exports rose less than imports, preliminary data showed.

In July, inbound shipments increased by 16.2 percent year-on-year to USD 44.9  billion, faster than a 10.8 percent rise in a month earlier and compared to market estimates of a 16.6 percent growth.

Exports grew by 6.2 percent to USD 51.9 billion, compared to consensus of a 7 percent gain and recovering from a 0.2 percent fall in June. Sales went up for steel (34 percent); semiconductors (31.6 percent); petrochemical products (24.1 percent); and autoparts (7.2 percent). In contrast, outbound shipments declined for vehicles (-13.5 percent); and ships (-73.4 percent).

Among major trading partners, exports to China, South Korea’s largest trading partner, soared 27.3 percent, marking the 21st straight month of growth, driven by robust memory chip sales. In addition, sales to the US and Japan went up by 8.8 percent and 17.6 percent, respectively. Still, exports of cars to the US fell 2.6 percent while steel shipments tumbled 23.4 percent, reflecting import tariffs on steel. On the other hand, sales fell to the ASEAN countries (-1.6 percent) and India (-5.4 percent). 

Considering the first seven months of 2018, the trade surplus narrowed sharply to USD 39.61 billion from USD 55.2 billion in the same period the prior year.

The trade tension between China and the US is expected to affect negatively South Korea's exports to China, its biggest trading partner and major buyer of South Korean intermediate goods. 


Thursday July 26 2018
South Korea Economy Expands 0.7% QoQ
Mario | mario@tradingeconomics.com

The South Korean economy advanced 0.7 percent quarter-on-quarter in the three months to June 2018 after a 1 percent expansion in the previous period and matching market expectations. The slowdown was explained by softer expansions in manufacturing and services and contractions in primary activity and construction, more than offsetting a sharp rebound in utilities, preliminary estimates showed.

Slower increases were recorded for manufacturing (+0.7 percent vs +1.6 percent in Q1) and services (+0.6 percent vs +1.1 percent), and contractions in primary activity (-2.5 percent vs +6.0 percent) and construction (-2.3 percent vs +2.1 percent), more than offsetting a sharp rebound in utilities (+9.7 percent vs -7.0 percent).

By expenditure, the softer overall growth was explained by a sharp 2.7 percent decline in gross fixed capital formation (vs +2.0 percent), with facilities falling 6.6 percent (vs +3.4 percent); construction 1.3 percent (vs +1.8 percent); and intellectual property rights 0.7 percent (vs +0.3 percent). Also, final consumption expenditure expanded less (0.3 percent after a 1.1 percent expansion in the first quarter), with both private and public spending rising 0.3 percent. Meantime, exports grew only 0.8 percent (vs +4.4 percent) and imports declined 2.6 percent (vs +4.9 percent).

Year-on-year, the economy advanced 2.9 percent in the second quarter of 2018, slightly above the 2.8 percent in the previous quarter but below the 3 percent expansion expected by consensus.



Thursday July 26 2018
South Korea Annual GDP Growth Edges Up in Q2
Mario | mario@tradingeconomics.com

The economy of South Korea advanced 2.9 percent year-on-year in the second quarter of 2018, slightly above the 2.8 percent growth recorded for the previous quarter but below the 3.0 percent expansion expected by consensus, preliminary estimates showed.

On the production side, manufacturing gained steam, expanding 3.3 percent after a 2.7 percent growth in the previous quarter. Also, utilities rebounded sharply, advancing 4.1 percent following a 1.7 percent drop in the first quarter. Meantime, primary activity moderated (+1.5 percent vs +4.1 percent) and services expanded at a slightly softer pace of 3.1 percent (vs +3.2 percent in Q1). In contrast, construction fell into contraction (-0.8 percent vs +0.2 percent).

On the expenditure side, exports expanded at a faster pace (+5.2 percent vs +1.6 percent), while imports advanced less (+2.4 percent vs +4.2 percent), adding to overall growth. In contrast, gross fixed formation contracted 1.1 percent after expanding 3.7 percent in the previous quarter, with construction slipping 0.7 percent (vs +1.8 percent in Q1) and facilities dropping 3.9 percent (vs +7.3 percent). In addition, final consumption grew at a softer clip of 3.3 percent (vs +4.0 percent), with private spending rising 2.8 percent (vs +3.5 percent) and public spending increasing 4.8 percent (vs +5.8 percent).

On a quarterly basis, the economy expanded 0.7 percent quarter-on-quarter in the three months to June 2018 after a 1 percent growth in the previous period and matching market expectations. 


Thursday July 12 2018
South Korea Leaves Monetary Policy Unchanged
Bank of Korea l Rida | rida@tradingeconomics.com

The Bank of Korea left its base rate steady at 1.5 percent on July 12th, as widely expected, mentioning growing concerns about US protectionist measures which can hit hard the export-driven South Korean economy. In addition, policymakers worry about the persistent sluggish labour market conditions, that continue to weigh on inflation.

Excerpts from the statement by The Bank of Korea:

The Board considers that the global economy has continued its robust growth. The volatility in the global financial markets has expanded, as a result mainly of concerns about the trade disputes in the world and of the strengthening of the US dollar. Looking ahead the Board sees global economic growth as likely to be affected by factors such as the movements toward spreading trade protectionism, the paces of monetary policy normalization in major countries, and the directions of the US government's economic policies.

The Board judges that the solid trend of domestic economic growth has continued, as consumption and exports have shown favorable movements although the adjustments in facilities and construction investment have persisted. Employment conditions are still sluggish, with the extent of increase in the number of persons employed having remained at a low level. Going forward the Board expects domestic economic growth to be slightly below the path projected in April, but to sustain a rate at its potential level. It anticipates that investment will slow but that the trend of steady increase in consumption will continue, and that exports will also sustain their favorable movements thanks to the buoyancy of the global economy.

Consumer price inflation has remained at the mid-1% level, due mainly to the slowing pace of increase in agricultural and livestock product prices and despite the prices of petroleum products having risen greatly. Core inflation (with food and energy product prices excluded from the CPI) has fallen into the low-1% range, and the rate of inflation expected by the general public has remained at the mid-2% level. Looking ahead it is forecast that consumer price inflation, after remaining in the mid-1% range for some time, will pick up and gradually approach the target level. Core inflation will also gradually rise.

The volatility of price variables in the domestic financial markets has expanded, in reflection of global financial market movements. The Korean won-US dollar exchange rate has risen significantly, in line with the global strengthening of the US dollar. Stock prices and long-term market interest rates have fallen to considerable extents, under the influence of heightened external uncertainties related chiefly to the US-China trade dispute. Household lending has sustained its higher rate of expansion than in past years, although the amount of its expansion has lessened somewhat. Housing sales prices have remained steady.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability. As it is forecast that inflationary pressures on the demand side will not be high for the time being, while the domestic economy is expected to continue its solid growth, the Board will maintain its accommodative monetary policy stance. In this process it will judge carefully whether it is necessary to adjust its accommodative monetary policy stance further, while closely checking future economic growth and inflation trends. It will also carefully monitor conditions related to trade with major countries, any changes in the monetary policies of major countries, the trend of increase in household debt, and geopolitical risks.