Korea economic outlook 2019: expect a counter-cyclical BOK policy

We believe Korea’s economic cycle will enter and remain in a contraction phase in 2019-20, as we expect real GDP growth to slow from 2.7% in 2018 to 2.5% in 2019 and further to 2.3% in 2020 – below our estimate of the economy’s potential growth of 2.8%. This is mainly because of the global tech sector downturn, corporate restructuring (especially in the labor-intensive auto and shipbuilding industries) and a housing market correction alongside household debt deleveraging.