South Korea: GDP disappoints in Q2 – UOB

Economist at UOB Group Ho Woei Chen reviews the latest release of the advanced GDP figures in South Korea during the April-June period.

Key Takeaways

South Korea’s advance 2Q23 GDP growth was in line with market’s and our expectation at 0.9% y/y, 0.6% q/q SA. However, the underlying data pointed to a sluggish economy with the sequential gain due to higher net exports as imports declined at a larger pace. 

Almost all the key components on the expenditure side registered a sequential decline including private consumption (-0.1% q/q), government consumption (-1.9% q/q), construction investment (-0.3% q/q), facilities investment (-0.2% q/q), exports (-1.8% q/q) and imports (-4.2% q/q).  

The uncertainties in the global electronics outlook, prolonged weakness in China’s economy, high domestic interest rates and geopolitical risks remain the key headwinds to South Korea’s outlook in 2H23. We retain our forecast for a slow recovery in South Korea’s economy with our GDP forecast remaining at 1.3% for 2023. 

We continue to expect the BOK to remain on hold at 3.50% for the rest of 2023.