South Korea Analysis

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Economic Analysis - 2018 Budget: Focus On Job Creation - JAN 2018

South Korea's proposed 2018 expansionary budget aims to fulfil President Moon Jae-in's campaign pledges by focusing on the welfare of the people and job creation. However, we expect the government to struggle to achieve its operating headline budget deficit of 1.6% of GDP as we expect revenue collection efforts to fall short.

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Economic Analysis - Upgrading Growth As External Outlook Improves - DEC 2017

South Korea's economy grew by 2.7% y-o-y in Q217, bringing H117 growth to 2.8% y-o-y, and we are upgrading our 2017 real GDP forecast to 2.8% from 2.6% previously (the same rate as 2016). Strong demand from the electronics sector is likely to be the main driver of both export growth as well as provide continued support for fixed asset investment in the semiconductor sector. Domestically, while...

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Currency Forecast - KRW: Long-Term Appreciatory Trajectory Still Intact - NOV 2017

We remain neutral on the KRW in the near term as the currency continues to test key technical resistance while geopolitical tensions remain high. Over the longer term, we expect the currency to appreciate slightly as it remains supported by positive growth-inflation dynamics, a still-undervalued real effective exchange rate, and a strong external position.

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Industry Trend Analysis - Online Banks To Be A Catalyst For Fintech Disruption - OCT 2017

The provision of a banking license to Kakao Bank marks a further step in the development of the fintech industry in South Korea and is likely to see banks push for greater deregulation amid a difficult operating environment as the rise in online banking poses a threat to conventional banks. We believe that the provision of a license will be positive for the development of more digital services...

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Economic Analysis - Supplementary Budget Beginning Of Shift Towards Increased Spending - SEPT 2017

While we do not expect South Korea's proposed supplementary budget to have an impact on the government's fiscal position, the speed by which the government has drawn up the proposal indicates the importance of job creation and marks the beginning of a shift towards one of increased spending. We maintain our expectations for the country's 2017 operating fiscal deficit to come in at 1.7% of GDP...

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Currency Forecast - KRW: Shifting To An Appreciatory Bias - AUG 2017

A widening real yield differential with the US due to very low inflation expectations, and the significant change in the trajectory of the Chinese yuan have improved the outlook for the Korean won, and we are shifting to an appreciatory bias. We have upgraded our 2017 average forecast to KRW1,160/USD from KRW1,250/USD previously, and forecast further mild appreciation beyond this.

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