South Korea chart book – An improving cycle vulnerable to trade wars


Encouraging signs abound from recent exports, PMI, business, and consumer confidence indicators. The return of China-US trade tensions, however, creates new uncertainties.
Ma Tieying14 May 2019
Photo credit: AFP Photo


● Encouraging signs abound from recent exports, PMI, business, and consumer confidence indicators.
● Chances are high that GDP growth will rebound modestly in 2Q after a temporary contraction (QoQ) in 1Q.
● The return of China-US trade tensions, however, creates new uncertainties.
● The easing of inflation/property prices provides the flexibility for the Bank of Korea to cut rates to support growth. An escalation of trade tensions could prompt the BOK to move.
● The KRW is facing depreciation pressure not only due to economic weakness, but also the fragile market sentiment caused by trade tensions and geopolitical risks.
● We maintain our GDP growth forecasts at 2.1% for 2019 and expect a 25bps rate cut in 3Q.



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Ma Tieying

Economist - Japan, South Korea, & Taiwan
matieying@dbs.com

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