Higher GDP growth for South Korea just a statistical bounce?

SEOUL - South Korea’s GDP has surprised to the upside, growing by 0.7% q/q and 3.2% y/y in Q2 on the back of firmer consumption and construction outturns. In a research note, ANZ Bank says the numbers suggest more of a statistical rebound from a weak Q1 than a genuine recovery in domestic demand.

“A mature economy like South Korea typically does not have highly elastic or timely responses to monetary and fiscal policy stimulus, so we would also discount that as an explanation for the surprise in the GDP figures,” ANZ says.
“Overall, we believe that the 3.2% y/y growth print for Q2 is likely to represent the high point of 2016 growth, with corporate debt restructuring to weigh heavily on the economy in H2 2016 and a more material slowing in growth to make itself evident in the coming quarters.”
ANZ says the slightly firmer than expected number sits at odds with both domestic and regional economic trends. “North Asia has been struggling under the weight of the China slowdown, with South Korea having a double exposure via both its commodity/refining sectors and high value-added capital goods sectors,” it says.  www.live.anz.com (ATI).