South Korea

RGE's Q1 2010 South Korea Outlook

Despite declines in investment and exports, South Korea, unlike other Asian Tigers, escaped a recession in 2009 due to aggressive fiscal stimulus and credit support to the financial and corporate sectors. Economic activity improved in Q2 and Q3 2009, backed by industrial production and exports along with improvement in domestic demand. However, the pace of recovery will moderate starting in Q4 2009 and slow further in H2 2010 due to waning fiscal stimulus, inventory restocking and exports to China, and the drag of a stronger currency on exports. A sustainable recovery will hinge on demand from China and the G3 countries. Capital inflows will continue to bolster asset markets, the currency and Korea’s external liquidity position. Despite commodity and asset inflation, the withdrawal of fiscal and monetary stimuli will be gradual in order to support growth for longer, given uncertainty about the global demand recovery. In the coming years, growth...

Read the Q1 2010 South Korea Outlook.