South Korean economy likely to have stayed strong at 3 pct year-on-year in Q2 – DBS Bank

South Korean second quarter economic growth data is set to be released this week. According to a DBS Bank research report, the economy is likely to have remained strong at 3 percent year-on-year, as compared with 2.8 percent growth recorded in the first quarter. On a sequential basis, growth is expected to have eased a bit to 3.6 percent from 4.1 percent.

Deceleration is mainly expected to have been driven by exports and investment, consistent with the weakening in global demand and the peaking of electronics cycle. Private consumption growth seems to have stayed stable, owing to the moderate rebound in wage growth, recovery in property prices and buoyant consumer sentiment.

A further deceleration is likely ahead in the second half, given the external headwinds stemming from trade protectionism and emerging market volatility. The Bank of Korea has lowered its economic growth forecast for this year to 2.9 percent from 3 percent during its July meeting.

“We maintain our forecast at 2.9 percent for the time being”, added DBS Bank.