According to the latest reports, it is expected that during the second quarter of 2019 South Korea managed to successfully shrug off the previous negativity and mark more growth. This is attributed to the Korean government’s spending program. The forecasted growth for Q2 is 1.0%, anticipated to be the highest rate in a year and a half. Year-on-year, this number is 2%, an improvement from the 1.7% from the first quarter.
This is surprisingly good news, considering how impactful the ongoing trade conflict between the United States and China has been for South Korea. Korea has an excellent relationship with the US, but is also very close with China, which historically has dominated East Asia with its influence.
Moreover, South Korea is under additional pressure from Japan. After the South Korean court demanded war reparations from Japan, the latter introduced a quota cap on high-tech materials exported to South Korea. This is proving to be challenging on Korean tech giants Samsung and LG, among others, as it makes the production of screens and chips more difficult.
The Bank of Korea implemented an interest rate cut last year in order to shield the economy from the trade war fallout and recently stated they could loosen their policy further if the economy is pressured more.
