The Week Ahead (May 27-31), South Korea: Trade Feuds Fuel Growth Fears

South Korea’s economy appears to have taken a hit recently from U.S.-China trade-related effects, as the week ahead brings further color on the country’s consumer and business confidence, as well as a rate decision from the Bank of Korea.

The week gets underway Monday, with fresh consumer confidence figures for May after the Composite Consumer Sentiment Index (CCSI) for the prior month registered 101.6, a rise of 1.8 points month-over-month.

Monday, May 27

  • Consumer Confidence (May)

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In fact, all components of the CCSI in April 2019 seems to belie any deleterious fallout from global trade-related tariffs and associated uncertainties.

Consumer sentiment concerning current living standards, for example, rose to 93, two points higher than March, with the outlook up one point to 95. Confidence about current domestic economic conditions climbed four points higher to 74, with the outlook up two points to 81.

Meanwhile, South Korea’s Business Survey Index (BSI) reflected similar results over the same period.

The BSI on business conditions in the manufacturing and non-manufacturing sectors were each up by two points and one point from March, respectively, to 75 and 74. The one-month outlook was also bright, with a month-over-month increase of one point on both fronts.

Tuesday, May 28

  • Business Confidence (May)

However, while South Korean households and corporations may be waxing optimistic about the country’s economic conditions, not all market participants hold the same degree of positive sentiment.

Marc Chandler, chief market strategist at Bannockburn Global Forex, recently noted that the U.S. tariff threat has “rocked” the Asia-Pacific region, underscored, in part, by South Korea’s first-quarter GDP contraction. 

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He said that while South Korea's manufacturing PMI rebounded back above 50 in April, its export orders were at nine-month lows. 

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