Morgan Stanley cuts 2019 GDP growth rate outlook to 2.7 percent
Investors take a look at an electronic signboard showing ups and downs of stock prices at one local brokerage in Seoul, in this file photo. Morgan Stanley has lowered Korea's expected GDP growth rate for 2019 to 2.7 percent, slowing from 3.0 percent expected this year. / Korea Time file
By Jung Da-min
Morgan Stanley has lowered Korea's expected GDP growth rate in 2019 to 2.7 percent, slowing from 3.0 percent expected this year.
The top-tier U.S.-based investment bank cited two factors ― moderating export volume momentum and a property market slowdown ― in its forecast for Asia's fourth-largest economy.
“Although the regional trade momentum has continued to hold up despite concern about trade protectionism, the momentum would slow down with the maturing cycle of the business of the developed market,” Deyi Tan, an economist with the investment bank, said in the report.
“The export cycle will likely shift from an earlier acceleration phase to one whereby it largely cruises along before moderating in 2019.”
The bank also pointed to the improvement in domestic demand, following the recovery of export and facilities investment, would be mild rather than robust.
“This is because improvement in the labor market has been less palpable, given that export recovery is narrowly driven by semiconductors,” according to the report. “Additionally, any spillover from exports to domestic demand is likely to be offset by the property market slowdown, which will filter through to construction investment.”
Morgan Stanley said exports during the first quarter of 2018 rose 1.6 percent year-on-year, while public consumption in the same period increased 6.1 percent, the strongest since the second quarter of 2009.