Forex Flash: Korean Q1 GDP estimate due tomorrow - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that the preliminary estimate of the first quarter GDP is due tomorrow.

They note that growth is projected to rise to 3.2% QoQ saar from 1.3% in 4Q12. Exports and investment should have both improved on the QoQ basis. Further, Consumption growth may have slowed on the other hand, due to cold weather that temporarily dampened outdoor activities and expiration of the fiscal stimulus measures rolled out in 2H12 (such as consumption tax cuts on automobiles and electronics).

The add that downside risks to the export outlook have increased recently, due to budget spending cuts in the US and a slower-than-expected economic recovery in China. That said, they are not particularly concerned about the relative performance of Korea’s exports, as the won remains far from overvalued and the non-price competitiveness of Korean exports is strong. Meanwhile, they finish by noting that domestic demand is expected to continue to pick up in the next several quarters, thanks to the government’s supplementary budget (new spending of KRW 7.3trn,0.6% GDP), and credit easing by the central bank.