Tuesday January 21 2020
South Korea GDP Growth Gains Steam
Mario | mario@tradingeconomics.com

South Korea’s quarterly GDP growth climbed to 1.2 percent in the three months to December 2019, accelerating from 0.4 percent in the previous quarter and beating market expectations of a 0.8 percent increase, advanced data showed.

Growth accelerated for primary activity (2.2 percent vs 0.6 percent in Q3) and services (0.7 percent vs 0.6). Meanwhile, utilities rebounded 3.9 percent after plunging 13.6 percent in the previous quarter and construction grew 4.9 percent after falling 4.9 percent in Q3. In contrast, manufacturing activity slowed (1.6 percent vs 2.4 percent).

On the expenditure side, final consumption growth remained steady at 3 percent, whereas gross fixed investment declined 0.3 percent after contracting 2.1 percent in the previous three months. Meanwhile, exports expanded 3.1 percent and imports 0.6 percent.

On an annual basis, the economy advanced 2.2 percent year-on-year, surpassing market expectations of a 1.9 percent increase and the 2 percent growth for the previous period. Utilities and manufacturing rebounded sharply, whereas manufacturing lost steam.





Friday January 17 2020
South Korea Holds Key Rate Unchanged at 1.25%
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea kept its base rate unchanged at 1.25 percent on January 17th 2020, as widely expected, amid easing global trade tensions and signs of domestic economic recovery following efforts from the government to step up fiscal spending. Policymakers said they will maintain accommodative monetary policy stance ahead as pressures on the demand side will remain low and the economy will grow moderately. In this process, they will judge whether to adjust monetary policy accommodation, while carefully monitoring developments in global trade disputes, the overseas countries and geopolitical risks.

The government previously announced that 62 percent of the state budget to be implemented in the first half of the year.

Excerpts from the statement by the Bank of Korea:

The board sees global economic growth and the global financial markets as likely to be affected largely by developments in global trade protectionism and geopolitical risks.

The board judges that the sluggishness in the domestic economy has eased somewhat. Facilities investment has slightly increased and consumption growth has expanded, although construction investment and exports have continued to decline. Employment conditions have continued to improve in some respects, with the increase in the number of persons employed having risen. GDP is forecast to grow at the lower-2% level this year, consistent overall with the level projected in November. Although the adjustment in construction investment will continue, the sluggishness in exports and facilities investment will gradually ease and the consumption growth rate will moderately rise.

Consumer price inflation has risen to the upper-0% level, due largely to a smaller decline in the prices of agricultural, livestock and fisheries products and to increases in petroleum product prices. Core inflation (with food and energy product prices excluded from the CPI) has been at the mid-0% range, and the rate of inflation expected by the general public has remained at the upper-1% level. Looking ahead, it is forecast that during this year consumer price inflation will rise to around 1%, generally in accord with the path projected in November, and core inflation will run at the upper-0% level.

In the domestic financial markets, stock prices have risen and the Korean won-US dollar exchange rate has fallen, affected chiefly by movements in the global financial markets and expectations of a recovery in the semiconductor industry. Long-term market interest rates have rebounded from an earlier decline. The amount of increase in household lending has expanded, and housing prices have shown high rates of increase in Seoul and its surrounding areas especially.

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 expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the board will maintain its accommodative monetary policy stance. In this process it will judge whether to adjust the degree of monetary policy accommodation, while carefully monitoring developments in global trade disputes, the economies of major countries, the trend of increase in household debt, and geopolitical risks and examining their effects on domestic macroeconomic and financial stability conditions.




Tuesday December 31 2019
South Korea Inflation Rate at 6-Month High
Statistics Korea l Rida Husna | rida@tradingeconomics.com

South Korea's annual inflation rate rose to 0.7 percent year-on-year in December 2019 from 0.2 percent in the previous month. This was the highest inflation rate since June, amid a faster rise in cost of housing & utilities, while prices of food and non-alcoholic beverages rose for the first time in five months and cost of transport rebounded.

Cost rose faster for housing & utilities (1.3 percent vs 1.1 percent in November), clothing and footwear (0.3 percent vs 0.1 percent),  health (1.4 percent vs 1.3 percent), and furnishings and household equipment (2 percent vs 1.5 percent). At the same time, prices of food and non-alcoholic beverages rose 0.1 percent, compared to a 0.7 percent fall in November. This marked the first food inflation since July, with cost falling less for fresh food (-3.2 percent vs -5.3 percent). Also, there was a rebound in transport prices (2.2 percent vs -1.2 percent). Meanwhile, inflation slowed for restaurants and hotels (1 percent vs 1.2 percent), while cost fell further for education (-0.7 percent vs -0.7 percent).

For 2019, the Bank of Korea targets inflation rate at 2 percent.

The core CPI, which excludes oil and agricultural products, rose 0.6 percent in December, after a 0.5 percent rise in November.

On a monthly basis, consumer prices went up 0.2 percent in December, following a 0.6 percent fall in the prior month and compared with market expectations of a 0.1 percent gain.




Tuesday December 03 2019
South Korea GDP Growth Confirmed at 0.4%
Bank of Korea | Mario | mario@tradingeconomics.com

South Korea’s quarterly GDP growth was confirmed at 0.4 percent in the three months to September 2019, easing from 1.0 percent in the previous quarter, due to a slower rise in services and sharp declines in utilities and construction.

On the production side, services lost steam and advanced 0.6 percent, compared to 0.8 percent in Q2. In addition, sharp contractions were recorded for utilities (-13.6 percent vs 10.7 percent) and construction (-4.9 percent vs 1.6 percent). Conversely, manufacturing output grew at a faster 2.4 percent after expanding 1.1 percent in the second quarter, boosted by computer, electronic and optical products. Primary activity rebounded a modest 0.6 percent after declining 3.6 percent, as crop output grew.

On the expenditure side, final consumption expenditure growth moderated to 0.5 percent compared to a 1.1 percent expansion in the previous quarter. Private spending edged up 0.2 percent after increasing 0.7 percent, as expenditures on durable goods rose while those on semi-durable goods declined. Meantime, government consumption grew at a softer 1.4 percent after expanding 2.2 percent, driven by an increase in health care benefits. Gross fixed capital formation slumped 2.7 percent after growing 1.6 percent, mainly dragged by a 6.0 percent decline in construction (vs 1.4 percent in Q2), as building construction and civil engineering decreased. Meanwhile, exports advanced faster (4.6 percent vs 2.0 percent), as shipments of motor vehicles and semiconductors rose, while imports rose at softer pace (1.2 percent vs 2.9 percent), driven by purchases of transportation equipment.

On an annual basis, the economy advanced 2.0 percent year-on-year in the third quarter, matching growth for the previous period and the preliminary estimate.


Tuesday December 03 2019
South Korea GDP Annual Growth Steady at 2%
Bank of Korea | Mario | mario@tradingeconomics.com

The South Korean economy advanced 2.0 percent year-on-year in the third quarter of 2019, matching growth for the previous period and the preliminary reading.

On the production side, services advanced at a 2.7 rate for the third quarter, the same as in the previous period, while agriculture (4.2 percent vs 0.4 percent) and manufacturing (1.8 percent vs 0.8 percent) gained steam. Meanwhile, there were declines in both construction (-3.5 percent vs -3.6 percent) and utilities (-1.9 percent vs 13.3 percent).

On the expenditure side, private consumption advanced at a weaker pace of 1.8 percent, compared to 2.0 percent in the previous three months. Meantime, government spending lost some steam (6.9 percent vs 7.0 percent) and gross fixed capital formation fell (-2.1 percent vs -3.4 percent) due to lower investment in construction (-3.7 percent vs -3.5 percent) facilities (-2.6 percent vs -7.0 percent). Meanwhile exports grew 1.8 percent (vs 1.2 percent in Q2) and imports 2.3 percent (after showing no growth in Q2).

On a quarterly basis, GDP growth eased to 0.4 percent in the three months to September from 1.0 percent in the previous quarter, matching the preliminary reading.




Monday December 02 2019
South Korea November Inflation Rate at 4-Month High
Statistics Korea | Stefanie Moya | stefanie.moya@tradingeconomics.com

Consumer prices in South Korea rose 0.2 percent year-on-year in November 2019, after being unchanged in the previous month and below market forecasts of a 0.5 percent gain. It was the first increase in consumer prices in four months mainly due to a higher cost of utilities.

Cost increased further for housing and utilities (1.1 percent from 1 percent in October); clothing and footwear (0.4 percent from 0.1 percent); and health (1.3 percent from 1.2 percent). Additionally, prices of food and non-alcoholic beverages fell 0.7 percent, following a 1.3 percent decline in October. It was the fourth consecutive decrease in the sub-index, still at a softer pace, as cost went down less for fresh food (-5.3 percent from -7.8 percent). Also, prices dropped less for transportation (-1.2 percent from -2.4 percent); and education (-0.7 percent from -0.8 percent). 

On the other hand, prices slowed for furnishings and household equipment (1.5 percent from 2.2 percent); and restaurants and hotels (1.2 percent from 1.4 percent).

For 2019, the Bank of Korea targets inflation rate at 2 percent.

The core CPI, which excludes oil and agricultural products, rose 0.6 percent in November, easing from a 0.8 percent rise in October.

On a monthly basis, consumer prices went down 0.6 percent, following a 0.2 percent gain in the prior month and compared with market expectations of a 0.2 percent decline.


Sunday December 01 2019
South Korea Posts Smallest Trade Surplus in 3 Months
Ministry of Trade, Industry & Energy (MOTIE) l Chusnul Ch Manan| chusnul@tradingeconomics.com

South Korea's trade surplus decreased to USD 3.37 billion in November 2019 from USD 4.67 billion in the same month a year earlier, a preliminary estimate showed. This was the smallest trade surplus since August, as exports fell more than imports.

Exports plunged 14.3 percent from a year earlier to USD 44.1 billion in November, worse than market expectations of a 10.2 percent drop. That was the 12th consecutive month of decline, the second-biggest fall in nearly four years, largely due to the US-China conflict, and an extended plunge in semiconductors prices. Also, global  prices of petrochemical products weakened. In addition, there were fewer working days in November than a year earlier.

Sales of semiconductors, which account for around 15 percent of total exports, tumbled 30.8 percent. Also, shipments of petrochemicals dropped 19 percent, due to the declining global demand, and those of ships plunged 62.1 percent, following a cancellation of a major project in November. 

Among major trade partners, exports to China declined 12.2 percent and those to the US went down 8.3 percent on the weaker demand chips, mobile devices and displys. Shipments to the Japan fell 10.9 percent, amid the trade row between South Korea and Japan. Meantime, exports to ASEAN member countries decreased 19.5 percent, due to the rising competition with Chinese firms.

Imports slumped 13.0 percent to USD 40.7 billion, compared to market forecasts of a 11.9 percent decline. That was the seventh straight month of year-on-year decrease in purchases.

Considering the first eleven months of 2019, the trade surplus narrowed sharply to USD 37.5 billion from USD 65.5 billion in the corresponding period the prior year.




Friday November 29 2019
South Korea Holds Base Rate at 1.25%
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea kept its base rate unchanged at 1.25 percent on November 29th 2019, as widely expected, as policymakers assessed the effect of its recent rate cuts. Meanwhile, amid weakening consumption growth and sluggishness in exports and facilities investment, the board lowered economic growth forecast to 2 percent from the previous estimate of 2.2 percent for this year and to 2.3 percent from 2.5 percent next year. Inflation projection was also revised down to 0.4 percent for this year from the previous 0.7 percent. The bank also said it will judge whether to adjust monetary policy accommodation, while carefully monitoring the US-China trade negotiations, geopolitical risks and and financial stability conditions.

Excerpts from the statement by the Bank of Korea:

The board considers that the pace of global economic growth has continued to slow as trade has contracted. The global financial markets have been stable in general, as risk aversion has subsided in line mainly with progress in the US-China trade negotiations. Looking ahead, the board sees global economic growth and the global financial markets as likely to be affected by factors such as the degree of the spread of trade protectionism, the changes in the monetary policies of major countries, and geopolitical risks.

The board judges that the pace of domestic economic growth has remained slow, as consumption growth has weakened, while the adjustment in construction investment and the sluggishness in exports and facilities investment have continued. Employment conditions have continued to improve in some respects, with the increase in the number of persons employed having risen. With respect to the domestic economy during next year, the board expects the sluggishness in exports and facilities investment will ease somewhat and the consumption growth rate will moderately rise, although the adjustment in construction investment will continue. GDP is forecast to grow at around 2 percent in 2019 and the lower-2 percent level in 2020.

Consumer price inflation was at the 0 percent level, due largely to a smaller decline in the prices of agricultural, livestock and fisheries products. Core inflation (with food and energy product prices excluded from the CPI) has been at the mid-0 percent range, and the rate of inflation expected by the general public has remained at the upper-1 percent level. Looking ahead, it is forecast that during next year consumer price inflation will moderately increase to around 1 percent and core inflation will be at the upper-0 percent level.

In the domestic financial markets, long-term market interest rates and stock prices have risen and the Korean won-US dollar exchange rate has fallen, affected chiefly by movements in the global financial markets. The rate of increase in household lending has continued to slow. Housing prices have risen as the pace of increase has expanded in 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 expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the board will maintain its accommodative monetary policy stance. In this process it will judge whether to adjust the degree of monetary policy accommodation, while carefully monitoring developments in the US-China trade negotiations, the economies and monetary policies of major countries, the trend of increase in household debt, and geopolitical risks and examining their effects on domestic macroeconomic and financial stability conditions.


Friday November 01 2019
South Korea Trade Surplus Narrows in October
Ministry of Trade, Industry and Energy | Rida Husna | rida@tradingeconomics.com

South Korea's trade surplus decreased to USD 5.39 billion in October 2019 from USD 6.38 billion in the same month a year earlier and compared to market expectations of a USD 3.51 billion surplus, a preliminary estimate showed.

Exports tumbled 14.7 percent from a year earlier to USD 46.8 billion in October, worse than market expectations of a 13.8 percent drop. That was the 11th consecutive month of decline and the biggest fall in nearly four years, largely due to the US-China conflict, as well as the stagnant semiconductor sector and a slowdown in the global economy.

Sales of semiconductors, which account for around 20 percent of total exports, plunged 32.1 percent. Memory chip prices exhibited a steadier trend, but they are still below last year’s level. The inventory of DRAM chips that remained at glut levels despite increasing demand also contributed to lower exports. Also, shipments of petrochemicals declined 22.6 percent on the back of falling demand, decreasing prices, and higher regular maintenance; while exports of secondary batteries dropped 11.2 percent from an all-time high reached in October 2018.

Meanwhile, bio-health products gained 7.8 percent as the medical device markets in China and Russia are expanding. Cosmetics climbed up 9.2 percent as more products were shipped to China and ASEAN. Those that drew attention were perfumes, face washes, makeup foundations, and deodorants. Agricultural and fisheries products went up 3.0 percent thanks to greater overseas demand for noodles and squids among many others.

Among major trade partners, exports to China slid 16.9 percent and those to the EU dropped 21.2 percent. Shipments to the Middle East, on the other hand, inched up 0.9 percent.

Imports slumped 14.6 percent to USD 41.4 billion, compared to market forecasts of a 13.2 percent decline. That was the sixth straight month of year-on-year decrease in purchases.

Considering the first ten months of 2019, the trade surplus narrowed sharply to USD 34.1 billion from USD 60.8 billion in the corresponding period the prior year.


Friday November 01 2019
South Korea Consumer Prices Flat in October
Statistics Korea | Mario | mario@tradingeconomics.com

Consumer prices in South Korea remained unchanged year-on-year in October 2019, following a 0.4 percent decline in the previous month and compared with market expectations of a 0.3 percent drop. Prices avoided a second month of deflation after booking in September the first fall since data releases began in 1965, as higher utility prices offset decreased prices of agricultural products.

Electricity and water and gas inflation was unchanged at 1.5 percent, while prices of agricultural, livestock and fisheries products fell 3.8 percent, compared to 8.2 percent plunge in September.

By expenditure category, prices of food and non-alcoholic beverages declined by 1.3 percent in October, a much softer pace compared to the 4.1 percent decrease for the prior month. It was the third straight fall in the sub-index, still recovering from the steepest drop since February 1987, as prices fell at a softer rate for fresh food (-7.8 percent vs -15.3 percent in September), namely vegetables (-1.6 percent vs -21.4 percent). In contrast, transportation prices fell further (-2.4 percent vs -1.6 percent). Cost of furnishings & household equipment increased by 2.2 percent (vs 1.4 percent in September), while inflation for housing edged down to 1.0 percent (vs 1.1 percent). Prices for education dropped once again by 0.8 percent and those for communication by 1.8 percent, while inflation for restaurants & hotels remained unchanged at 1.4 percent.

For 2019, the Bank of Korea targets inflation rate at 2 percent.

The core CPI, which excludes oil and agricultural products, advanced 0.8 percent over a year, following a 0.6 percent increase in September.

On a monthly basis, consumer prices increased 0.2 percent in October after increasing 0.4 percent.