South Korean GDP growth data for the third quarter is scheduled to release tomorrow. According to a DBS Bank research report, GDP growth is likely to have decelerated to 3.5 percent from second quarter’s 4.2 percent. This will take the average growth in the initial three quarters to 2.1 percent, a subpar level compared to 2.7 percent in 2018 and the potential rate of 2.5 percent to 2.6 percent.
Exports continued to shrink in the third quarter, reflecting the fallout of global growth deceleration, Japan-South Korea trade tensions and U.S.-China trade war. However, domestic demand indicated some signs of unemployment rate. This was probably aided by the festive demand, increase in fiscal spending, and fall in interest rates.
Admittedly, external environment continues to be challenging and its negative spillovers on the domestic economy might counter the policy stimulus effects in the quarters ahead.
“We are maintaining our full-year GDP growth forecast at 2.1 percent for 2019 and 2.4 percent for 2020 at present, but seeing risks tilted towards the downside”, added DBS Bank.
