South Korea: GDP growth stays firm – UOB

Economist at UOB Group Ho Woei Chen, CFA, comments on the latest GDP figures in South Korea.

Key Takeaways

“South Korea’s 2Q21 GDP was marginally below consensus expectations at 5.9% y/y, 0.7% q/q seasonally-adjusted (Bloomberg est: 6.0% y/y, 0.8% s/a q/q; UOB est: 5.6% y/y, 0.4% q/q). Nonetheless, the noticeable pick-up in private consumption in 2Q21 (3.6% y/y, 3.5% q/q) pointed to further broadening out of the economic growth drivers but it should also be noted this was before the spike in COVID-19 infections in early-July and new daily cases have remained above 1,000 since then.”

“On a q/q seasonally-adjusted basis, GDP expanded for the fourth straight quarter, by 0.7% in 2Q21 compared to 1.7% in 1Q21. This was led by private and government consumption at 3.5% q/q and 3.9% q/q from 1.2% and 1.6% respectively in 1Q21.”

“While there are downside risks to South Korea’s outlook from its worst COVID-19 infection wave, we maintain our full-year 2021 GDP growth forecast of 3.7% for now, taking into account the economic recovery so far as well as the fiscal support measures including the second supplementary budget announced in July that is worth KRW33.0 trillion (1.7% of GDP) as well as possible extension of its COVID-19 loan and interest payment deferral program that will expire in September.”