Friday January 13 2017
Bank of Korea Holds Base Rate Steady; Cuts GDP Forecast
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea left its base rate steady for the seventh straight month at record low of 1.25 percent at its January meeting, as expected. While saying the trend of recovery in domestic demand activities is expected to be limited, due to deterioration in economic sentiment for example; policymakers forecast a rate of GDP growth for this year will be in the mid- 2 percent range, weaker than previous projection of 2.8 percent.

Excerpts from the statement by the Bank of Korea:

Based on currently available information the Board considers that the trend of global economic recovery has expanded somewhat, led by the US and some emerging market economies. Global financial market volatility has diminished, as the trends of rising government bond rates in major countries have subsided and stock prices have risen. Looking ahead the Board judges that the global economic recovery will be affected by factors such as the directions of the new US government's economic policies, the pace of monetary policy normalization by the US Federal Reserve, and the movements toward spreading trade protectionism.

In Korea, the slump in exports has eased but the Board judges the pace of domestic economic growth to have slowed somewhat, as the recovery in domestic demand activities has weakened. Employment conditions have been somewhat sluggish, with the number of persons employed having continued to decline in the manufacturing sector while its trend of increase in the service sector has slowed as well. The Board sees the domestic economy as likely to continue its trend of moderate growth going forward, and forecasts a rate of GDP growth for this year in the mid-2 percent range. The trend of recovery in domestic demand activities is expected to be limited, due to deteriorations in economic sentiment for example, but exports will likely improve thanks chiefly to the global economic recovery.

Consumer price inflation has risen to the mid-1 percent level, in line with the easing of downward price pressures on the supply side. Core inflation (excluding food & energy product prices from the CPI) has been in the mid- to upper-1 percent range, while the rate of inflation expected by the general public has remained at the mid-2 percent level. Looking ahead, the Board forecasts that consumer price inflation will gradually rise to near the 2 percent target level by around the middle of 2017, on the effects mainly of the increases in international oil prices, and that core inflation will maintain a level in the mid- to upper-1 percent range.

In the domestic financial markets, the volatilities of both stock prices and long-term market interest rates have subsided somewhat as the global financial market has stabilized. The Korean won-US dollar exchange rate has continued its uptrend seen since October of last year, in line with the strengthening of the US dollar globally. The upward trends of housing sales prices have slowed, centering around Seoul and its surrounding areas. Household lending has continued its substantial increase, but the amount of increase in that by banks has shown signs of lessening recently.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation approaches the target level over a medium-term horizon, while paying attention to financial stability. As the inflationary pressures on the demand side are not expected to be high, given the moderate pace of domestic economic growth, the Board will maintain its stance of monetary policy accommodation. In this process it will closely monitor the uncertainties in domestic and external conditions and their effects, the progress of monetary policy normalization by the US Federal Reserve, and the trend of increase in household debt.






Tuesday January 10 2017
South Korea Jobless Rate Falls To 3.4%
Joana Taborda | joana.taborda@tradingeconomics.com

South Korea's seasonally adjusted unemployment rate decreased to 3.4 percent in December 2016 from 3.6 percent in the previous month. It was the lowest reading since November of 2015.

The number of unemployed persons decreased by 32 thousand from the previous month to 942 thousand while employment rose by 211 thousand to 26,550 thousand people. 
 
A year earlier, the jobless rate was higher at 3.5 percent.
 
On an unadjusted basis, the unemployment rate was 3.2 percent. For 2016 as a whole, the jobless rate edged up to 3.7 percent from 3.6 percent in 2015.




Sunday January 01 2017
South Korea Trade Surplus Little Changed in December
Rida Husna | rida@tradingeconomics.com

South Korea recorded a USD 7.0 billion trade surplus in December of 2016, compared to a USD 6.9 billion surplus a year earlier, as exports rose 6.4 percent from a year earlier to USD 45.07 billion while imports went up 7.3 percent to USD 38.07 billion, preliminary data showed.

In December, sales grew for the second straight month and in line with market expectations. Outbound shipments rose for semi-conductors (+19.9 percent), machinery and petrochemicals. In contrast, sales dropped for automobiles (-7.9 percent) and wireless devices (-2.0 percent).

Exports jumped 30.8 percent to the EU countries, followed by those to China (+9.6 percent). In contrast, exports to China decreased by 2.3 percent.

In November 2016, trade surplus was upwardly revised to USD 8.2 billion.

Considering full year of 2016, sales declined by 5.9 percent to USD 495.5 billion, slower than a 8.0 percent drop in 2015. Purchases were down by 7.1 percent to USD 405.7 billion, much less than a 16.9 percent decline in the preceding year. That brought the trade surplus during of USD 89.8 billion, down slightly from USD 90.3 billion in a year earlier.

For 2017, exports are expected to rise 2.9 percent, supported by improving global demand, while imports are projected to grow by 7.2 percent. For the year, trade conditions will likely face downside risks from possible US protectionist measures under the administration of president-elect Donald Trump and a slowdown in China.

The trade balance has been in consistent surpluses since February 2012.




Thursday December 29 2016
South Korea Inflation Rate Steady At 1.3% In December
Statistics Korea l Yekaterina Guchshina | yekaterina@tradingeconomics.com

South Korea's consumer prices increased by 1.3 percent year-on-year in December 2016, the same as in the previous two months and in line with market expectations. Cost of transport rebounded while prices of housing and utilities dropped. Also, cost of health and food rose at a slower pace. On a monthly basis, consumer prices edged up 0.1 percent, following a 0.1 percent drop in November and below consensus of 0.2 percent gain.

Year-on-year, prices jumped for transport (+1 percent from -0.2 percent in November), and rose at a faster pace for restaurants and hotels (+2.2 percent from +2.1 percent). In contrast, housing and utilities fell 1.3 percent (+0.1 percent in November) and cost increased at a slower pace for: food and non-alcoholic beverages (+4.1 percent from +4.5 percent in November) and health (+1 percent from +1.1 percent).

Annual core inflation rate decreased to 1.2 percent from 1.4 percent the previous month.

On a monthly basis, consumer prices edged up 0.1 percent, following a 0.1 percent drop in November and below market expectations of 0.2 percent drop. Prices of housing and utilities fell 1 percent while cost of transport rose 0.9 percent.




Thursday December 15 2016
Bank of Korea Holds Base Rate Steady for 6th Month
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea left its base rate steady for the sixth straight month at record low of 1.25 percent at its December meeting, as expected. While saying the improvements in domestic demand have been weak, policymakers judged the downside risks to the future growth path had expanded a bit, owing chiefly to the high degrees of uncertainty in recent domestic and external conditions.

Excerpts from the statement by the Bank of Korea:

Looking at the Korean economy, exports have shifted to an increase but the improvements in domestic demand activities have been weak. On the employment front, the employment-to-population ratio in November was higher than that in November of last year, as the number of persons employed increased. The unemployment rate meanwhile maintained the same level as in November last year. The Board forecasts that the domestic economy will sustain its trend of modest growth going forward, in line with a recovery of the global economy, but judges that the downside risks to the future growth path have expanded a bit.

Consumer price inflation registered 1.3 percent in November, the same as in October despite the extent of decline in petroleum product prices having narrowed, as the pace of increase in prices of industrial products other than petroleum slowed. Core inflation excluding agricultural and petroleum product prices fell slightly to 1.4 percent, from 1.5 percent in October. In the housing market, sales and leasehold deposit prices have shown upward trends, centering around Seoul and its surrounding areas. Looking ahead the Board forecasts that consumer price inflation will gradually rise, due mainly to the effects of the increases in international oil prices.

In the domestic financial markets since November, influenced mainly by expectations concerning the new US government's economic policies and the monetary policy of the US Federal Reserve, long-term market interest rates and the Korean won-US dollar exchange rate have risen. The Korean won-Japanese yen exchange rate has meanwhile fallen, in line with the yen’s relative weakening. Stock prices have rebounded after having declined, owing in part to increases in global stock prices. The extent of growth in household lending has expanded, led by home mortgage loans.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation approaches the target level over a medium-term horizon, while paying attention to financial stability. In this process it will closely monitor the uncertainties in domestic and external  conditions and their effects, the progress of monetary policy normalization by the US Federal Reserve, and the trend of increase in household debt.






Tuesday December 13 2016
South Korea Jobless Rate Edges Down To 3.6% In November
Statistics Korea l Joana Ferreira | joana.ferreira@tradingeconomics.com

South Korea's seasonally adjusted unemployment rate decreased to 3.6 percent in November 2016 from 3.7 percent in the previous month. It was the lowest reading since July.

The number of unemployed persons decreased by 47 thousand from the previous month to 974 thousand while employment rose by 83 thousand to 26,399 thousand people. Meantime, labour force participation rate went up to 62.9 percent from 62.8 in October.

A year earlier, the jobless rate was recorded at 3.4 percent.

On an unadjusted basis, the unemployment rate dropped to 3.1 percent unchanged from the same month of the previous year, as the number of unemployed persons increased by 25 thousand to 854 thousand. Employment also rose by 339 thousand to 26,592 thousand, pushing up the employment rate to 61.1 percent from 60.8 percent in November 2015.


Thursday December 01 2016
South Korea Trade Surplus Narrows in November
Joana Ferreira | joana.ferreira@tradingeconomics.com

South Korea's trade surplus fell to USD 7.99 billion in November 2016 from USD 10.24 billion the same month a year earlier, preliminary data showed. Exports increased by 2.7 percent, as shipments to China grew for the first time in 17 months, while imports advanced at a faster 10.1 percent.

Year-on-year, exports increased by 2.7 percent to USD 45.48 billion from USD 44.29 billion, following a revised 3.5 percent fall in October while markets expected a 1.2 percent gain. Sales rose the most for: machinery (+19.3 percent), followed by semiconductors (+11.6 percent, largely due to growing demand for mobile chips) and steel products (+10.8 percent). Outbound shipments of automobile also went up 1.5 percent, marking the first growth in 17 months and following partial strikes at major carmakers, including industry leader Hyundai Motor). In contrast, outbound shipments fell for shipbuilding (-36.8 percent) and wireless device, including mobile phones (-17.9 percent in the aftermath of the output halt of Samsung Electronics Galaxy Note 7).

Shipments to China, the largest market for South Korean products, grew for the first time in 17 months. Exports to the U.S., the country's second-largest trade partner,  gained 3.9 percent and marking the first gain in six months.

Imports advanced at a faster 10.1 percent to USD 37.49 billion from USD 34.05 billion, after dropping by a revised 4.8 percent the preceding month and higher than market consensus of 2.9 percent rise.

In October 2016, the trade surplus was downwardly revised to USD 6.97 billion.

The trade balance has been in consistent surpluses since February 2012.


Wednesday November 30 2016
South Korea Inflation Rate Steady At Highest Since February
Statistics Korea l Joana Ferreira | joana.ferreira@tradingeconomics.com

South Korea's consumer prices increased by 1.3 percent year-on-year in November 2016, the same as in October but below market expectations of a 1.5 percent growth. The inflation rate remained the highest since February this year, as cost of housing and utilities rebounded and prices of health advanced further, while cost of food, and restaurants and hotels rose at a slower pace.

Year-on-year, prices of housing and utilities edged up 0.1 percent, recovering from a 0.4 percent fall in October; and cost of health advanced further by 1.1 percent, compared to a 0.9 percent growth the previous month. Meanwhile, prices rose at a slower pace for: Food and non-alcoholic beverages (+4.5 percent from +5 percent in October) and restaurants and hotels (+2.1 percent from +2.2 percent). By contrast, transport prices continued to fall (-0.2 percent from -1.4 percent in October).

Annual core inflation rate decreased to 1.4 percent from 1.5 percent the previous month.

On a monthly basis, consumer prices fell 0.1 percent, following a 0.1 percent gain in October and in line with market expectations. Prices of housing and utilities rose 0.6 percent while cost of food decreased 1.6 percent.


Friday November 11 2016
South Korea Leaves Monetary Policy Unchanged
Bank of Korea l Rida Husna | rida@tradingeconomics.com

The Bank of Korea left its base rate steady for the fifth straight month at record low of 1.25 percent at its November meeting, as expected. While forecasting consumer prices in the economy will gradually rise, mainly due to the weakening influence of the low oil prices, policymakers said they will closely monitor the uncertainties in domestic and external conditions, any changes in the monetary policy of the US Federal Reserve, and the trend of increase in household debt.

Excerpts from the statement by the Bank of Korea:

Looking at the Korean economy, exports have continued their trend of decline while the improvements in domestic demand activities appear to have weakened a bit. On the employment front, the employment-to-population ratio in October was slightly higher than that in October of last year, as the number of persons employed increased. The unemployment rate meanwhile rose somewhat. The Board forecasts that the domestic economy will sustain its trend of modest growth going forward, in line with  a recovery of the global economy, but in view of recent changes in domestic and external conditions judges the uncertainties surrounding the growth path to have increased further.

Consumer price inflation rose from 1.2 percent the month before to 1.3 percent in October, owing chiefly to the expiration of a temporary cut in electricity fees. Core inflation excluding agricultural and petroleum product prices also rose to 1.5 percent, from 1.3 percent in September. In the housing market, the extents of increase in sales and leasehold deposit prices have expanded, centering around the Seoul area. Looking ahead the Board forecasts that consumer price inflation will gradually rise, due mainly to the weakening influence of the low oil prices.

In the domestic financial markets since October, influenced mainly by strengthened expectations of a policy rate hike by the US Federal Reserve, and by the result of the  US presidential election, long-term market interest rates and the Korean won-US dollar exchange rate have risen to large extents and stock prices have declined. The Korean won-Japanese yen exchange rate has fallen slightly. Household lending has sustained a trend of substantial increase at a level exceeding that of recent years, led by mortgage loans.

Looking ahead, the Board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation approaches the target level over a medium-term horizon, while paying attention to financial stability. 



Wednesday November 09 2016
South Korea Unemployment Rate Falls to 3-Month Low
Mojdeh | mojdeh@tradingeconomics.com

South Korea seasonally adjusted unemployment rate decreased to 3.7 percent in October of 2016 from 4 percent in the preceding and better than market expectation of 4 percent. It was the lowest reading since July.

The number of unemployed persons decreased by 73 thousand to 1021 thousand people and  there were 26316 thousand people employed, 23 thousand more than in September. Meantime, labour force participation rate edged down to 63.2 percent from 63.3 in the previous month.

A year earlier, the jobless rate came in at 3.4 percent.

On an unadjusted basis, unemployment rate rose to 3.4 percent from 3.1 percent in Ocbober 2015, as the number of unemployed persons increased to 923 thousand compared to 839 thousand. Employment rose by 1.1 percent to 61.1 percent as there were 26,577 people employed compared to 26,298 people in a year earlier. 

Year-on-year, youth unemployment rate was recorded at 8.5 percent in October, up from 7.4 percent. The economically active population marked 27,499 in October, up 1.3 percent. The inactive population came in at 16,013, vistually unchanged from the same month of the previous year. The labor force participation rate stood at 63.2 percent, up by 0.3 percentage points.

Within sectors, employment rose for business, personal, public service & others (+259 thousand); wholesale & retail trade, accommodation & food (+111 thousand); construction (+59 thousand); mining and manufacturing (+9 thousand) and electricity, transport, telecom & finance (+4 thousand). In contrast, employment went down for  agriculture, forestry & fishing (-46 thousand).