BoK already flagged a significant pickup in GDP fuelled by domestic demand

The Bank of Korea (BoK) Governor Lee disclosed a flash estimate of 1.1% qoq for Q3 2015 GDP growth at the recent IMF conference in Lima, which was echoed by President Park. Finance Minister Choi too has emphasized a recent recovery in domestic demand. We got more information on the breakdown of Q3 GDP from BoK's quarterly macroeconomic outlook released on 15 October. 

"According to our estimate, based on BoK's detailed GDP forecasts, we are likely to see a sizeable pickup in domestic demand: we anticipate qoq growth of 1.0% for private consumption, and around 2.0% growth in both construction and facility investment", says Societe Generale.

The strength in consumption points to a recovery from the MERS shock; the sustained strength in construction investment comes on the back of a resilient housing market; and the pickup in non-construction investment may be a sign of normalisation after the weakness in H1. The contribution from net exports should be negative as goods exports growth is expected to be around zero after considerable strength in Q2. A significant pickup in GDP driven by consumption and investment would support the BoK's decidedly neutral stance that was obvious at the October MPC meeting.