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 >

2017-09-20 07:03:38
0m
2017-09-20 07:00:40
0m

September 20 06:00 UTC Released

DEProducer Prices YY

Actual

2.6 %

Forecast

2.5 %

Previous

2.3 %

September 20 06:00 UTC Released

DEProducer Prices MM

Actual

0.2 %

Forecast

0.1 %

Previous

0.2 %

September 20 08:00 UTC 2323m

ZACPI MM*

Actual

Forecast

0.20 %

Previous

0.3 %

September 20 08:00 UTC 2323m

ZACore Inflation MM*

Actual

Forecast

0.2 %

Previous

0.5 %

September 20 08:00 UTC 2323m

ZACore Inflation YY*

Actual

Forecast

4.6 %

Previous

4.7 %

September 20 08:00 UTC 2323m

ZACPI YY*

Actual

Forecast

4.9 %

Previous

4.6 %

September 20 08:30 UTC 5353m

GBRetail Sales MM

Actual

Forecast

0.2 %

Previous

0.3 %

September 20 08:30 UTC 5353m

GBRetail Sales YY

Actual

Forecast

1.1 %

Previous

1.3 %

September 20 08:30 UTC 5353m

GBRetail Sales Ex-Fuel MM

Actual

Forecast

0.2 %

Previous

0.5 %

September 20 08:30 UTC 5353m

GBRetail Sales Ex-Fuel YY

Actual

Forecast

1.4 %

Previous

1.5 %

Close

Welcome to EconoTimes

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