Analysts at ANZ note that the South Korea’s preliminary Q1 2019 GDP printed -0.3% q/q sa (+1.8% y/y), which was the weakest since the global financial crisis.

Key Quotes

“The weakness was broad-based, with the decline in exports deepening and feeding into final domestic demand (particularly investment). While there are reasons to think that Q1 GDP may have marked the bottom in growth, the big picture is that South Korea’s economic performance is likely to be lacklustre in 2019 and any recovery would likely be gradual.”

“In light of today’s weak outturn, we are downgrading our full-year growth forecast to 2.2% from 2.5%. With the economy on a shaky footing, the pressure for a stronger policy response is growing, and the odds that the Bank of Korea (BoK) will unwind its 2018 rate hike are rising. We are currently reviewing our forecast for no BoK rate change in 2019.”