Macroeconomic Forecast South Korea

BMI View: The South Korean economy expanded at a rate of 5.2% y-o-y in Q307, prompting us to raise our full-year GDP growth for 2007 from 4.7% to 5.0%. South Korean exports have held up well due to strong demand from key markets like China and the EU. Moreover, rising investment and improving consumer sentiment have lifted the prospects for domestic demand going forward. We are expecting this momentum to be maintained in 2008 and have set our GDP projectiom at 5.1%. Inflation is, however, becoming a concern and we expect a further tightening of monetary policy.

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