Tuesday January 22 2019
South Korea GDP Grows 1% QoQ and Beats Expectations
Mario | mario@tradingeconomics.com

The South Korean economy advanced 1.0 percent quarter-on-quarter in the three months to December 2018, up from 0.6 percent in the previous three months and market expectations, advanced data showed.

It was the fastest expansion in three quarters, with growth mainly nudged by final consumption (+1.5 percent vs +0.7 percent in Q3), namely government spending (+3.1 percent vs +1.5 percent), amid increased expenditures on goods and health care benefits. Also, private spending advanced faster (+1.0 percent vs +0.5 percent), mainly due to a rise in services; and gross fixed investment went up 1.8 percent, reversing from a 4.6 percent contraction in the previous quarter. Meantime, exports shrank 2.2 percent (vs +3.9 percent), led by decreases in shipments of electrical and electronic equipment such as semiconductors. Conversely, imports edged up 0.6 percent (vs -0.7 percent), owing to purchases of crude oil and coal & petroleum products.

By economic activity, agricultural activity rebounded a sharp 5.8 percent, after a steep 5.5 percent fall in Q3, mainly due to an increase in livestock products. Utilities also rebounded by 4.0 percent, after dropping 0.4 percent, mostly due to higher sales of electricity; and construction grew by 1.1 percent, reversing from a 5.7 percent plunge, amid expansions in non-residential building construction and civil engineering. Meantime, services rose further (0.7 percent vs 0.5 percent), led by gains in wholesale and retail trade and health & social work services. On the other hand, manufacturing expanded at a much softer pace of 0.8 percent, compared to 2.3 percent growth in Q3.





Tuesday January 22 2019
South Korea Annual GDP Growth Gains Steam
Mario | mario@tradingeconomics.com

The South Korean economy expanded 3.1 percent year-on-year in the three months to December 2018, accelerating from a 2.0 percent growth in the previous quarter and beating market expectations of 2.8 percent, advanced data showed.

It was the fastest growth in five quarters, mainly nudged by a 5.5 percent expansion in manufacturing (vs 2.8 percent in the previous three-month period) and a 5.5 percent rise in utilities (vs 1.9 percent in Q3). Meantime, services gained steam (2.7 percent vs 2.4 percent) and primary activity rebounded (+2.9 percent vs -2.4 percent). In contrast, the construction sector shrank 5.8 percent, after a sharp 8.1 percent decline in the prior quarter. 

On the expenditure side, final consumption gained steam, expanding 3.6 percent after 3.0 percent growth in the third quarter, with government spending surging 7.1 percent (vs +4.6 percent) and private spending climbing by 2.5 percent for the second quarter. In contrast, gross fixed investment declined 3.9 percent after a 6.6 percent plunge. Meantime, exports jumped 6.5 percent (vs +3.1 percent) and imports rose at a much slower 1.6 percent (vs -1.8 percent).

For full 2018, the GDP advanced 2.7 percent, the slowest annual growth since 2012, retreating from 3.1 percent in the previous year.




Tuesday January 01 2019
South Korea Trade Surplus Smallest in 10 Months
Rida | rida@tradingeconomics.com

South Korea’s trade surplus narrowed to USD 4.56 billion in December of 2018 from USD 5.51 billion in the same month of the preceding year, a preliminary data showed. It was the smallest trade surplus since February, as imports rose while exports fell.

Year-on-year, imports increased 0.9 percent to USD 43.91 billion, far lower than a 11.5 percent rise in November and missing market expectations of a 4.2 percent growth.

Exports declined 1.2 percent to USD 48.46 billion, following a 4.1 percent gain in a month earlier and also below market estimates of a 3.3 percent rise. It was the first drop in outbound shipments in three months, amid ongoing trade conflict between China and the US. Sales of semiconductors, which dominate the country’s sales, were down 8.3 percent.

Exports to China, South Korea's top trading partner, contracted 13.9 percent and marking the second straight month of fall.

For full 2018, the trade surplus was at USD 70.5 billion, reaching the 10th straight year the country sold more goods than it bought. Sales for the year grew 5.5 percent from the same period the prior year to a record high of USD 605.5 billion, about a third of the 15.8 percent gain in the preceding year, with shipments of semiconductors, general machinery and petrochemicals mainly contributing to the increase in 2018. Among major trading partners, exports to China surged 14.2 percent to USD 162.2 billion, supported by strong demand for memory chips, petrochemical products and general machinery. Also, sales to the US rose 6 percent to USD 72.7 billion, driven by general machinery and memory chips, and despite tougher import restrictions imposed by the administration of President Donald Trump. Exports to the ASEAN countries grew 5.3 percent to USD 100.3 billion, due to solid sales of memory chips and petrochemical products. Meanwhile purchases for the year jumped 11.8 percent to USD 505.0 billion.




Monday December 31 2018
South Korea Inflation Rate at 9-Month Low of 1.3%
Statistics Korea l Chusnul Ch Manan | chusnul@tradingeconomics.com

South Korea's annual inflation rate eased to 1.3 percent in December of 2018 from 2.0 percent in the previous month and below market expectations of 1.7 percent. It was the lowest inflation rate since March, amid a softer rise in cost of housing & utilities and food while transport prices declined.

Year-on-year, prices rose slower for housing and utilities (1.3 percent vs 1.6 percent in November); food and non-alcoholic beverages (4.2 percent vs 5.4 percent); clothing and footwear (0.5 percent vs 0.9 percent); recreation and culture (0.8 percent vs 1.5 percent); furnishing, household equipment & routine maintenance (2.0 percent vs 2.4 percent); and alcoholic beverages and tobacco (0.1 percent vs 0.3 percent). In addition, transport prices declined (-0.9 percent from 2.6 percent) while cost of health dropped at a faster pace (-0.3 percent vs -0.2 percent). On the other hand, prices went up faster for restaurant and hotels (3.1 percent vs 2.5 percent) while inflation was steady for both miscellaneous goods and services (at 0.9 percent) and education (at 1.5 percent). Meantime, cost of communication continued to fall (-1.9 percent, the same pace as in November).
 
Core CPI, which excludes oil and agricultural products, increased by 1.1 percent, after a 1.2 percent rise in November.
 
On a monthly basis, consumer prices declined 0.3 percent, following a 0.7 percent fall in November, missing market consensus of a 0.1 percent increase.
 
 
 




Tuesday December 04 2018
South Korea Inflation Rate Steady at 2% in November
Statistics Korea l Rida | rida@tradingeconomics.com

South Korea's annual inflation came in at 2 percent in November of 2018, the same as in the previous month while market had expected of a 2.2 percent rise. It remained the highest inflation rate since September 2017, amid a faster rise in cost of housing & utilities while inflation slowed for food and transport.

Year-on-year, prices advanced faster for housing and utilities (1.6 percent vs 0.8 percent in October); restaurant and hotels (2.5 percent vs 2.4 percent); clothing and footwear (0.9 percent vs 0.6 percent); recreation and culture (1.5 percent vs 0.5 percent); miscellaneous goods and services (0.9 percent vs 0.5 percent); furnishing, household equipment & routine maintenance (2.4 percent vs 2.3 percent); and alcoholic beverages and tobacco (0.3 percent vs 0.1 percent). Also, cost of health fell at a softer pace (-0.2 percent vs -0.4 percent). Meantime, inflation was steady for education (at 1.5 percent, the same as in October) while eased for food and non-alcoholic beverages (5.4 percent vs 5.6 percent); and transport (2.6 percent from 4.6 percent). Additionally, cost of communication continued to decline (-1.9 percent vs - 1.8 percent).

Core CPI, which excludes oil and agricultural products, increased by 1.3 percent, after a 1.1 percent rise in October and marking the highest figure in six months

On a monthly basis, consumer prices declined 0.7 percent, following a 0.2 percent fall in October and compared with market consensus of a 0.4 percent decrease.


Tuesday December 04 2018
South Korea GDP Growth Slows to 9-Year Low in Q3
Bank of Korea | Mario | mario@tradingeconomics.com

The South Korean economy expanded 2.0 percent year-on-year in the three months to September 2018, slowing from a 2.8 percent growth in the previous quarter and in line with market expectations, final data showed. It was the weakest growth rate since the third quarter of 2009.

On the production side, construction plunged 8.1 percent, after a 1.6 percent contraction in the previous quarter (vs a preliminary -7.8 percent) and agriculture declined 2.4 percent compared to a 1.2 percent expansion in the second quarter of the year. Additionally, slower growth was recorded in manufacturing (2.8 percent vs 3.2 percent in Q2), utilities (1.9 percent vs 3.9 percent in Q2 vs preliminary 2.2 percent), and services (2.4 percent vs 3.0 percent in Q2).

On the expenditure side, gross fixed capital formation shrank by 6.6 percent (vs -1.3 percent in Q2 vs preliminary -6.5 percent), with construction plunging 8.9 percent. Also, final consumption lost steam (3.0 percent vs 3.3 percent in Q2 vs preliminary 3.2 percent), as government expenditure (4.6 percent vs 4.8 percent in Q2 vs preliminary 4.7 percent) and private spending (2.5 percent vs 2.8 percent in Q2 vs preliminary 2.6 percent) slowed. Meantime, exports grew 3.1 percent, while imports declined 1.8 percent.

On a quarterly basis, the economy advanced 0.6 percent quarter-on-quarter in the three months to September 2018, the same pace as in the previous period and also matching market consensus and the preliminary reading.



Tuesday December 04 2018
South Korea Q3 GDP Growth Confirmed at 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 September 2018, the same pace as in the previous period and matching market consensus and the preliminary reading, final data showed.

Growth was mainly driven by a strong 2.3 percent expansion in manufacturing (vs +0.6 percent in the previous period), more than offsetting contractions in utilities (-0.4 percent vs 9.4 percent in Q2), construction (-5.7 percent vs -3.1 percent), and primary activity (-5.5 percent vs -2.8 percent). Meantime, services grew by 0.5 percent for the second straight period.

On the expenditure side, government spending rose 1.5 percent (vs 0.3 percent in Q2 vs preliminary 1.6 percent) and private expenditure 0.5 percent (vs 0.3 percent in Q2 vs preliminary 0.6 percent), whereas gross fixed capital formation plunged 4.6 percent (vs -2.9 percent in Q2 vs preliminary 4.5 percent), mainly dragged by a 6.7 percent contraction in construction (vs -2.1 percent in Q2 vs preliminary 6.4 percent). Exports grew 3.9 percent while imports edged down 0.7 percent.

On an annual basis, the economy expanded 2.0 percent (unchanged from preliminary) slowing from a 2.8 percent growth in the previous three months and in line with market expectations.


Saturday December 01 2018
South Korea Trade Surplus Narrows 33.2% YoY in November
Ministry of Trade, Industry & Energy (MOTIE) l Rida | rida@tradingeconomics.com

South Korea’s trade surplus narrowed sharply to USD 5.14 billion in November of 2018 from USD 7.69 billion in the same month of the preceding year, preliminary data showed. It was the smallest trade surplus since February, as imports rose more than exports.

Year-on-year, imports increased 11.4 percent to USD 46.78 billion, after an upwardly revised 28.1 percent jump in a month earlier while markets had expected a 12 percent rise.

Exports rose at a softer 4.5 percent to USD 51.92 billion, following a 22.7 percent surge in October and below consensus of a 6.6 percent gain. It marked the second straight month of increase in outbound shipments, amid ongoing trade dispute between China and the US. Exports of semiconductors jumped 11.6, led by solid sales of high-value chips and storage devices. Also, sales of petrochemical products advanced 23.5 percent, supported by solid demand. In contrast, sales of vehicles dropped 2 percent, amid weak demand in the Middle East and tougher environmental regulations in Europe. Exports of displays fell 10 percent, due to a drop in prices of  liquid crystal displays and weakening demand for flat-screen TVs.

Among major trading partners, sales to the US went up 7.9 percent, mainly driven by vehicles, general machinery and semiconductors. In addition, sales to the ASEAN countries grew 13 percent, led by strong demand for semiconductor, petroleum goods and displays. In contrast, exports to China, South Korea's top trading partner, shrank 2.5 percent and reaching the first drop in over two years, amid sluggish sales of wireless communication equipment and displays, coupled with a high base effect.

Considering the first eleven months of 2018, the trade surplus narrowed sharply to USD 66.31 billion from USD 89.71 billion in the corresponding period the prior year.


Friday November 30 2018
South Korea Hikes Key Rate for First Time in a Year
Bank of Korea l Rida | rida@tradingeconomics.com

The Bank of Korea raised its base rate by 25 basis points to 1.75 percent on November 30th 2018, as widely expected. It is the first rate hike since November 2017, amid huge household debts.

Excerpts from the statement by The Bank of Korea:

The board considers that the global economy has maintained its trend of generally sound growth, despite signs of weakening somewhat during the 3rd quarter. The high volatility in the global financial markets has continued, with stock prices in major countries falling for example, but the financial unrest in some vulnerable emerging countries has eased slightly. Looking ahead the Board sees global economic growth and the global financial markets 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 political uncertainties in the euro area.

The board judges that the domestic economy has sustained a rate of growth at its potential level generally, as consumption has continued to grow modestly and exports have maintained favorable movements, although the adjustments in facilities and construction investment have persisted. The sluggishness in employment conditions has lessened somewhat, with the amount of increase in the number of persons employed having picked up slightly. Going forward the Board expects domestic economic growth to be generally consistent with the path projected in October, and to sustain a rate that does not diverge significantly from 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 was at the 2 percent level, as the paces of increase in prices of agricultural and petroleum products accelerated. Core inflation (with food and energy product prices excluded from the CPI) has been at around the 1 percent level, and the rate of inflation expected by the general public has been in the mid-2 percent range. Looking ahead it is forecast that consumer price inflation will remain near the target level for some time, and then fall slightly and fluctuate in the mid- to upper-1 percent range. Core inflation will also gradually rise. 

In the domestic financial markets, the volatility of major price variables expanded and then in November diminished moderately. Stock prices fell considerably, in line mostly with drops in stock prices in major countries, before then rebounding on expectations of an easing of the US-China trade dispute. Long-term market interest rates have declined, and the Korean won-US dollar exchange rate has fallen slightly. The amount of increase in household lending expanded in October, while the pace of increase in housing sales prices slowed due to the Korean government’s measures to stabilize the housing market. 

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, and that the domestic economy will sustain a rate of growth that does not diverge significantly from its potential level, the board will maintain its accommodative monetary policy stance. In this process it will judge 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.




Thursday November 01 2018
South Korea Trade Surplus Narrows in October
Ministry of Trade, Industry & Energy (MOTIE) l Rida | rida@tradingeconomics.com

South Korea’s trade surplus narrowed slightly to USD 6.55 billion in October of 2018 from USD 6.93 billion in the same month of the preceding year, preliminary data showed.

In October, imports to South Korea jumped 27.9 percent year-on-year to USD 48.22 billion in October of 2018, after an upwardly revised 1.6 percent fall in the previous month and well above market expectations of 19 percent increase.

Exports surged 22.7 percent year-on-year to USD 54.97 billion in October, recovering from a 8.2 percent fall in the previous month. The sharp rebound  was largely attributable to the traditional three-day Chuseok holidays falling in September this year but in October last year. Sales of petroleum goods soared 42.9 percent to a record high of  USD 4.49 billion, boosted by strong demand and rising oil prices. Also, exports of general machinery soared 51.7 percent to a record-high of USD 4.99 billion, due to large infrastructure projects in emerging economies. In addition, outbound shipments of semiconductors jumped 22.2 percent to USD 11.59 billion. On the other hand, sales of displays fell 7.9 percent to USD 2.29 billion, affected by falling prices of liquid crystal display panels amid weak demand for TVs. Also, exports of wireless communication equipment was 18.2 percent lower to  USD 1.66 billion, due to increased production in overseas factories and falling demand for new smartphones.

Among major trading partners, exports to China, South Korea's top trading partner, rose 17.7 percent on-year on the back of memory chips, petrochemicals and machinery products. Also, sales to the US surged 47.8 percent, driven by strong demand for new SUVs, general machinery and wireless communication equipment.

Considering the first ten months of 2018, the trade surplus narrowed sharply to USD 61.17 billion from USD 82.01 billion in the corresponding period the prior year.