Yesterday, KDI, research institution backed by Korean government, announced its expectation for regional economic growth for this year. The number is 2.4%, which is lower than 2.6% announced in Nov, last year.
KDI expects that the growth of export yoy for this year will be 1.6%, which was 3.7% in former expectation at last November. It exacerbates almost all other items including private consumption, capital investments or construction investments.
In fact, the expectation is assuming that there will not be additional deterioration of the trade war between the US and China. Interwinded with the trade war, semiconductor sector being aggravated could lower the number additionally.
Here are the numbers of the expected growth from various institutions and brokers.
Korean President Moon and his secretaries are strongly insisting that the regional economy still has positive momentum, and suggesting that the economic growth will definitely start to revive from coming second quarter. We should understand that the government and Bank of Korea have to preserve positive perspective to exert the effect of their supplementary budget to the full, even though no one is believing the government at this time.
Mr. Moon still has been getting enough support from the public, to drive his policies as much as he want. At least for this year, we cannot expect that government could show any change in its economic policy. Wage-led growth, decreasing working hours and increasing government spending will continue.
Korean government bonds will be very attractive assets for market participants for a while.