South Korean economy likely to continue recording solid growth - Scotiabank

South Korea’s economy is expected to carry on recording strong growth in spite of increased geopolitical and trade-related uncertainties, noted Scotiabank in a research report. Activity continues to be supported by growth in fixed investment and exports that show strong global demand.

Consumer sentiment in South Korea is strong, indicating towards continued household spending momentum; prospects would be further stimulated by January increase in minimum wages, stated Scotiabank. In the meantime, the government’s 2018 budget continues to keep a supportive fiscal policy stance while monetary conditions remain accommodative in spite of gradual normalization.

“We expect South Korea’s real GDP to grow by 3.0% y/y through 2019”, stated Scotiabank.

North Korea’s nuclear ambitions pose the main risk to South Korea’s economic outlook in 2018. Elevated geopolitical tensions on the Korean Peninsula might dent consumer and business sentiment, negatively impacting household spending and business investment. Furthermore, a rise in the North Korea risk might also set off financial market turbulence, yet South Korean authorities are likely to intervene effectively to maintain financial stability, added Scotiabank.

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