Korean Q3 GDP likely stronger

There are indications seen that Korea's Q3 GDP growth could surprise the earlier forecast of 0.6% q/q sa by around 30bp on the upside, on the back of stronger domestic demand indicators for September. 

In recent weeks, a stronger than expected post MERS recovery is seen in retail sales, construction and real estate activity, which should mitigate the 1.2% q/q sa drop in Q3 exports and slower-than-expected inventory adjustment cycle in electronics and autos. Indeed, tracking indicators from the past few weeks point to increasing risk that Q3 growth may be closer to the official expectation of at least 1% q/q sa. 

"Q3 GDP growth and full year growth are forecastsed to 0.9% q/q sa and 2.5% y/y, respectively. That said, the stronger pick up in Q3 reflects partly payback for the softer Q2 (0.3% q/q). Underlying growth momentum is expected to remain weak into 2016, and for the stance of monetary policy to remain accommodative well into next year. 2016 growth forecast is unchanged at 3%", says Barclays.