South Korea: The downturn begins – ANZ

South Korea’s preliminary Q1 GDP growth came in better than expected, but still marked the sharpest pace of contraction since the global financial crisis, per ANZ Bank. USD/KRW is sitting at 1229.75.

Key quotes

“Although South Korea’s Q1 GDP growth came in better than expected, it nevertheless marked the sharpest pace of contraction since 2008 (-1.4% q/q sa).”

“We expect South Korea’s GDP growth to remain considerably weak in H1. A recovery in H2 is likely but contingent upon the progress in slowing the global spread of COVID-19, and the pace of normalization in post-lockdown economic activity in Korea’s major trading partners.”

“To cushion the economy from the potential fallout in external trade, the BoK may deliver another 25bp rate cut in Q2.”