Macroeconomic Forecast South Korea

We maintain our forecast of a 3.3% contraction of South Korea's GDP in 2009 as exports drop sharply and domestic demand shrivels. While a weaker currency and fiscal and monetary stimulus should serve to dampen the slowdown, the gains of export diversification now appear limited as few markets will escape unscathed in 2009. With the ongoing global downturn now expected to last well into 2010, we expect South Korea to post a relatively meager 1.8% GDP expansion next year.

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