Thursday February 23 2017
Bank of Korea Holds Base Rate Steady For 8th Month
Bank of Korea l Rida Husna | rida@tradingeconomics.com

South Korean Monetary Policy Committee left its base rate steady for the eighth straight month at record low of 1.25 percent at its February meeting, as expected. While highlighting the inflationary pressures on the demand side are not expected to be high given the moderate pace of domestic economic growth, policymakers said they will closely monitor the uncertainties in domestic and external conditions.

Excerpts from the statement by the Bank of Korea:

The Board sees the global economic recovery as likely to 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, the movements toward spreading trade protectionism, and the political uncertainties in the euro area.

The Board judges that the domestic economy has continued its trend of moderate growth, as exports have improved although the recovery in domestic demand activities has been weak due to a slump in consumption. Employment conditions have been sluggish, with the extent of decline in the number of persons employed having widened in the manufacturing sector and the trend of increase in persons employed in the service sector having slowed as well. The Board sees the domestic economy as likely to continue its trend of moderate growth going forward, and expects growth to be generally in accord with the path projected in January. Compared to the January forecasts the Board judges that consumption will likely fall somewhat below the level projected, due to a continuing deterioration in economic sentiment for example, but that exports and facilities investment will improve more than forecast thanks chiefly to the global economic recovery.

Consumer price inflation has risen to the 2 percent target level, in line mainly with increases in the prices of petroleum and agricultural, livestock and fisheries products. Core inflation (with food and energy product prices excluded from the CPI) has remained in the mid- to upper-1% range, while the rate of inflation expected by the general public has risen to the upper-2 percent level. Looking ahead the Board expects that consumer price inflation will for the time being fluctuate at a level close to 2 percent, but for the year as a whole not diverge greatly from the January projection (1.8 percent) as the prices of agricultural, livestock and fisheries products recover their trends of stability. 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 as the stability in the global financial markets has continued. The Korean won-US dollar exchange rate has fallen to a large extent, owing mainly to a shift to US dollar weakening in line with the new US government’s policies related to the exchange rate. The extent of growth in bank household lending has continued to lessen, but the substantial increase in household lending by non-banks has been sustained. Housing sales prices in both Seoul and its surrounding areas and the rest of the country have remained generally 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 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.




Wednesday February 15 2017
South Korea Jobless Rate Up To 3.6% In January
Statistics Korea l Luisa Carvalho | luisa.carvalho@tradingeconomics.com

South Korea's seasonally adjusted unemployment rate increased to 3.6 percent in January 2017, from an upwardly revised 3.5 percent in December. The figure came above market expectations of 3.4 percent.

The number of unemployed persons rose by 40 thousand from the previous month to 982 thousand while employment declined by 148 thousand to 26,402 thousand people. 
 
A year earlier, the jobless rate was lower at 3.5 percent.

On an unadjusted basis, the unemployment rate was 3.7 percent.







Wednesday February 01 2017
South Korea Inflation Rate At Over 4-Year High Of 2%
Statistics Korea | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in South Korea increased 2 percent year-on-year in January of 2017, following a 1.3 percent rise in the previous three months and beating market expectations of 1.5 percent. It is the highest inflation rate since October of 2012, mainly boosted by food and fuel cost. The inflation hit the central bank target of 2 percent for the first time since it was introduced in 2016.

Year-on-year, cost of food and non-alcoholic beverages went up 5.3 percent (4.1 percent in December), the highest in four months. Prices also increased faster for transport (3.8 percent from 1 percent); miscellaneous goods and services (3.3 percent from 2.8 percent); education (1.4 percent from 1.3 percent) and recreation and culture (2.4 percent from 1.4 percent). In addition, inflation was steady for restaurants and hotels (2.2 percent) and cost fell less for housing and utilities (-0.3 percent from -1.3 percent).
 
Annual core inflation went up to 1.5 percent from 1.2 percent in December.
 
On a monthly basis, consumer prices increased 0.9 percent after edging up 0.1 percent in December and beating expectations of a 0.4 percent increase. 




Wednesday February 01 2017
South Korea Trade Surplus Narrows To 30-Month Low
Rida Husna | rida@tradingeconomics.com

South Korea recorded a USD 3.20 billion trade surplus in January of 2017, compared to a USD 4.93 billion surplus a year earlier. It was the smallest trade surplus since July 2014 as exports rose less than imports, preliminary data showed.

In January, sales grew 11.2 percent from a year earlier to USD 40.33 billion, following a 6.4 percent rise in December 2016. It was the third straight month of increase and the fastest since February 2012. Outbound shipments surged for petroleum products (67.4 percent) and semi-conductors (41.6 percent).

Exports went up to China (13.5 percent), followed by the EU countries (13.4 percent). In contrast, sales to the US fell 1.8 percent.

Imports jumped 18.6 percent to USD 37.13 billion, compared to a 8.0 percent gain in the prior month.

In December 2016, trade surplus was downwardly revised to USD 6.79 billion.

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 Donald Trump and a slowdown in China.

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




Tuesday January 24 2017
South Korea Annual GDP Growth Slows to 1-1/2-Year Low
Bank of Korea | Joana Taborda | joana.taborda@tradingeconomics.com

The South Korean economy expanded 2.3 percent year-on-year in the last three months of 2016, beating market expectations of 2.2 percent but slowing from a 2.6 percent increase in the previous period. Yet, it is the lowest growth rate in six quarters as services and construction eased, preliminary estimates showed.

Services expanded at a slower 2 percent (2.7 percent in Q3), construction eased (10.2 percent vs 10.6 percent), utilities stalled (+5.3 percent) and agriculture continued to contract (-4.8 percent vs -4.6 percent) while manufacturing rose at a faster 1.9 percent (0.8 percent).
 
On a quarterly basis, the economy expanded 0.4 percent, beating market expectations of a 0.3 percent increase but slowing to the lowest growth rate in six quarters.
 
Considering full 2016, the GDP advanced 2.7 percent, slightly higher than 2.6 percent in 2015 and matching the central bank growth target. On the expenditure side, although private (2.4 percent vs 2.2 percent in 2015) and government consumption (3.9 percent vs 3.4 percent) accelerated, and construction investment greatly enlarged (11 percent vs 3.9 percent), facilities investment contracted (-2.4 percent vs +5.3 percent). Exports accelerated (1.4 percent vs 0.8 percent) and imports slowed (3 percent vs 3.2 percent). On the production side, growth in construction (11 percent vs 3 percent) and manufacturing accelerated (1.7 percent vs 1.3 percent) while services slowed (2.5 percent vs 2.8 percent). 




Tuesday January 24 2017
South Korea GDP Growth Beats Expectations in Q4
Bank of Korea | Joana Taborda | joana.taborda@tradingeconomics.com

The South Korean economy expanded 0.4 percent on quarter in the last three months of 2016, beating market expectations of a 0.3 percent increase. Yet, it is the lowest growth rate in six quarters as household, public spending and investment slowed and exports edged down, preliminary estimates showed.

Private consumption expanded a meager 0.2 percent (0.5 percent in the previous period) as expenditures on durable goods increased. Public spending rose at a slower 0.5 percent (1.4 percent in the previous period).
 
Gross fixed capital formation eased (0.8 percent compared to 2 percent in the previous period): facilities investment grew 6.3 percent (0.2 percent in the previous period), led by investment in transport equipment and machinery; investment in intellectual property products expanded 0.2 percent (0.6 percent in the previous period) with an increase in R&D investment and construction investment fell 1.7 percent (+3.5 percent in the previous period) with a decrease in civil engineering.
 
Exports contracted 0.1 percent (+0.6 percent in the previous period), mainly due to sales of transport services that offset an increase in exports of automobiles. Imports rose 0.2 percent (2.8 percent in the previous period), as purchases of crude oil and natural gas increased.
 
Year-on-year, the economy advanced 2.3 percent, below 2.6 percent in the previous quarter but above market expectations of 2.2 percent. Considering full 2016, the GDP advanced 2.7 percent, slightly higher than 2.6 percent in 2015 and matching the central bank growth target.




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.