Macroeconomic Forecast South Korea

South Korean manufacturing showed a slower rate of growth in May, according to the HSBC Purchasing Managers Index. The 54.6 reading was the lowest in five months, down from 57.1 in May (any number above 50.0 indicates an expansion in manufacturing). The reading is in line with our expectations that South Korea's economy will continue expanding through much of 2010, but that the pace of expansion will moderate with a China-induced slowdown taking effect in 2011. We forecast South Korean growth to come in at an impressive 5.5% this year, before dropping to 3.2% in 2011.

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