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 an improving consumer sentiment have lifted the prospects for domestic demand going ahead. We are expecting this momentum to be maintained in 2008 and have set our GDP target at 5.1%. Inflation is, however, becoming a major concern and we a risk of overheating tendencies in the economy next year.

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