Economists at Standard Chartered raise the 2021 GDP growth forecast for the South Korean economy to 3.9% from 3.2% to reflect a strong Q1, broad-based growth. What’s more, strong export-led growth and light positioning are set to drive further KRW gains.
“We raise our 2021 GDP growth forecast for Korea to 3.9% from 3.2%, mainly to reflect a strong Q1 performance that was balanced across economic sectors. We believe the positive impact of strong exports carried through to domestic consumption and investment, supported by government spending. Exports will likely continue to lead Korea’s recovery for the rest of 2021.”
“Korea’s strong growth, driven by exports and export-led investment, supports our bullish view on the KRW. We find the broadening of Korea’s export rebound encouraging and believe the export momentum can be sustained for longer. We have been tracking the rebound in memory chip prices as a key positive for semiconductor exports, and believe the price effect could boost chip exports further, on top of earlier volume gains.”
“The recent strong pick-up in shipbuilding orders, along with a rebound in exports of goods such as automobiles and chemicals, suggests sustained export strength. We expect a stronger external account to drive further KRW gains.”
“We forecast USD/KRW at 1,100 at end-Q2-2021 and 1,050 at end-2021, with downside risks to our forecasts.”
