South Korea: GDP expected to expand 2.7% in 2022 – UOB

UOB Group’s Economist Ho Woei Chen, CFA, reviews the latest release of the GDP figures in South Korea.

Key Takeaways

“South Korea’s advance GDP for 1Q22 was better-than-expected at 3.1% y/y, 0.7% q/q seasonally adjusted (Bloomberg est: 3.0% y/y, 0.6% s/a q/q) as the economy continued to recover from the COVID-19 pandemic. Korea’s GDP rose sequentially for the 7th consecutive quarter though momentum has moderated in 1Q22.”

“As the external demand outlook weakens, South Korea’s exports and investments will find it increasingly difficult to outperform. However, private consumption will be lifted as the country moves towards endemicity with pent-up demand and improvements in the labour market underlying the recovery. Growth in the subsequent quarters will likely moderate to below 3.0% y/y.”

“We maintain our full-year GDP growth forecast for South Korea at 2.7% and raise our inflation forecast to 3.9% from 3.3% previously, with inflation likely to stay above 4.0% in 2Q-3Q.”