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GDP 2Q Contracts – Opening Door for BOK.

SOUTH KOREA


  • Second quarter GDP contracted 0.2% in line with expectations.
  • Overall the economy grew 2.3% yoy in line with estimates.
  • Manufacturing for 2Q grew 0.8%
  • Construction contracted 6%
  • Services in line with estimates unchanged on quarter, +1.7% yoy
  • The key takeaway for the BOK will be the construction decline. In an environment where ongoing concerns as to property price rises in Seoul continue, changes in construction and how that impacts property prices going forward will be watched closely.
  • With CPI moderating, and the economy contracting, the BOK appears now (depending on the trajectory of property prices) to be inching towards a better environment to cut rates to support the consumer.

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