Wainwright Marks Management - South Korean Economy Loses Momentum

According to a recent poll, South Korea's economy likely expanded at the slowest pace in more than 12 months in the period from January to March as investment activity slowed and exports weakened.

South Korea is Asia's fourth largest economy and analysts at Wainwright Marks Management say it is beginning to show signs of strain amid trade tensions between the US and China.

In the first quarter of this year, South Korea's economy grew by only 0.3 percent compared with a 1 percent expansion in the final quarter of 2018. In the first quarter of 2018, South Korea's economy grew by 2.5 percent.

Wainwright Marks Management analysts say South Korean policy makers have promised to draw up an additional budget in an effort to boost economic growth. This year it is anticipated that South Korea's economy will expand by only 2.5 percent as exports continue to weaken.

The additional budget will be submitted to parliament before the end of April and will likely be in the region of 7 trillion won and dedicated to dealing with pollution and other downside risks to the stalling economy.

But analysts at Wainwright Marks Management say the supplementary budget may have a limited impact on 2019's economic prospects.

Wainwright Marks Management analysts cited a cooling in demand for chips, which is affecting the outlook for shipments, as another reason for the country's disappointing economic growth prospects.

In the first quarter of this year, South Korea's exports were the worst performing out of all Asian countries, declining by 8 percent. This will certainly have a negative impact on GDP expansion.