The South Korean economic growth is expected to have slowed in the first quarter of 2016, according to Societe Generale. The economy is likely to have grown 0.5% sa q/q in Q1 2016 as compared with 0.7% growth in Q4 2015. The monthly activity data indicates that weakness in facility investment and private consumption are expected to have primarily driven the slowdown in the economic growth.
In its quarterly macroeconomic outlook, which was released in April, the Bank of Korea slightly revised its private consumption forecast downward. This indicates that the central bank has noticed the signs of a rapid rebound in consumption, said Societe Generale. On the other hand, the central bank’s downwardly revised outlook for facility investment indicates that facility investment will perform sluggishly in 2016. Also, the central bank had revised down its outlook on exports, signifying that exports also performed weakly in the first quarter.
Construction investment is expected to have primarily driven the overall economic growth in the first quarter, noted Societe Generale. The central bank had revised construction investment outlook upwardly in its quarterly forecast.
The Bank of Korea moderately revised down its economic growth forecast for 2016 from 3% to 2.8%. This implies that the central bank projects the economic growth to recover from the second quarter, added Societe Generale.
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