South Korean economic growth likely to have rebounded in Q2 2019

South Korean second quarter GDP growth data is set to release tomorrow. According to a DBS Bank research report, the economic growth is expected to have recovered to 3.2 percent quarter-on-quarter from the prior quarter’s 1.4 percent. However, the average growth in the first half of 2019 might stay weak at just 0.9 percent. The fall in exports has not indicated signs of easing in the second quarter.

Exports to China dropped sharply, reflecting the negative spillover effects of U.S.-China trade war. Investment indicators, such as equipment investment and construction output, also continued to languish in the second quarter. Business sentiment came in soft and fragile, in the midst of the externally-driven manufacturing downturn and the policy-induced property market deceleration. Consumption indicators performed well in the second quarter, possibly because of the government’s fiscal stimulus measures.

“Notwithstanding the BOK’s latest 25bps rate cut and the easing of financial conditions, the near-term growth outlook remains challenging, in our view, considering the rise in Japan-Korea trade tensions and the deterioration in global economic environment”, added DBS Bank.