Korea’s industrial production is likely to have shown a modest decline in March after the technical rebound in February, which would not bode well for the near-term growth outlook. The weakness in the electronics sector indicated by March exports data should be the main driver of the anticipated contraction in manufacturing production. Moreover, trade data suggest that growth in the chemical and metal sectors will be lukewarm at best. The only sector likely to show clear strength is the auto sector, according to industry data. “A contraction in industrial production will support our base scenario of a 25bp rate cut by the Bank of Korea (BoK) in May, though we need to see additional March activity data (retail sales, facility investment) and April trade data before coming to a firm conclusion”, says Societe Generale in a report on Wednesday.
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