Menu

Search

  |   Commentary

Menu

  |   Commentary

Search

Political uncertainty likely to hold back economic activity in Korea until new President comes in place, says Fitch Ratings

Political uncertainty is likely to hold back economic activity until a new president is elected. Uncertainty will delay investment and weigh on consumer confidence. In December 2016, consumer confidence fell to levels not seen since 2009.

Korea’s economy grew at a decent rate of 2.7 percent in 2016, though more slowly than what was anticipated in the last GEO (+2.9 percent). GDP growth was supported by strong government spending and by construction activity growing at unprecedented levels of 11 percent.

Furthermore, the bank lending survey has pointed to a marked deterioration in banks’ willingness to lend, which should weigh on credit growth in the months ahead. House price inflation is also slowing, but so far high-frequency data on building permits are not really pointing to any impending slowdown in construction activity. Corporate restructuring, notably in the shipbuilding industry could weigh on non-construction investment, Fitch Ratings reported.

The construction boom has been fuelled by low interest rates and the relaxation of home-loan restrictions in 2014. Indeed, household debt grew at a strong 11.7 percent y/y in 4Q16.

"We do not expect political disruption to severely affect economic activity in the medium term, but Korea could be significantly impacted by a more protectionist world given the highly open nature of the economy," the report said.

  • ET PRO
  • Market Data

Market-moving news and views, 24 hours a day >

November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

Forecast

Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

Actual

54.6 %

Forecast

Previous

54.6 %

November 27 09:00 UTC 32093209m

ITExport Prices*

Actual

Forecast

Previous

111 %

November 27 09:00 UTC 32093209m

ITImport Prices*

Actual

Forecast

Previous

116.1 %

November 27 14:00 UTC 35093509m

MXTrade Balance, $*

Actual

Forecast

Previous

-1.886 Bln USD

November 27 14:00 UTC 35093509m

MXTrade Balance SA*

Actual

Forecast

Previous

-1.559 Bln USD

November 27 15:30 UTC 35993599m

USDallas Fed mfg bus index

Actual

Forecast

Previous

27.6

November 27 21:00 UTC 39293929m

KRBOK Manufacturing BSI*

Actual

Forecast

Previous

87 Bln BRL

November 28 00:00 UTC 41094109m

BRCentral Govt Balance

Actual

Forecast

Previous

-22.725 Bln BRL

November 28 07:00 UTC 45294529m

DEGDP Growth QQ* Advance

Actual

Forecast

Previous

10.7 %

Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.