Macroeconomic Forecast South Korea

Although there is a growing body of evidence to suggest that South Korea is now beyond the worst of the economic downturn, we reiterate previous warnings about the slow, and somewhat uneven nature of the recovery. The main question marks, in our view, are the still-uncertain state of global demand (exports accounted for 63% of GDP in 2008), and the recovery of domestic consumption, which we expect to be slow given the country's high levels of personal debt. In light of these factors, we maintain our 2009 forecast of a 3.3% contraction, though acknowledge that this forecast is subject to increasing upside risks..

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