Korea Economy, Construction & Lumber Shipments
The South Korean economy expanded 3.3% in 2014 as increased facility investments offset slowing growth in construction investment and exports.Facility investment increased 5.8% in 2014, turning around from a 0.8% on-year contraction in 2013. Construction investment growth, however, sharply slowed to 1% from a 5.5% growth in the previous year.
Private spending came in at 1.8%, remaining mostly unchanged from a 1.9% on-year gain in the previous year. Their per capita gross national income, a gauge of the population’s purchasing power, reached US$28,180, up $2,001 from 2013.Exports rose 2.8%, slowing from a 4.3% increase in 2013, while growth in imports quickened to 2.1% from 1.7%.
South Korea’s gross domestic product grew 0.8% in the 1st quarter of 2015 from three months earlier on increased construction investment and improved spending. From a year earlier, the economy expanded 2.4% in the first quarter.Consumer spending increased 0.6% from three months earlier, slightly quickening from a 0.5% rise in the fourth quarter. Government spending growth stayed on par at 0.2%.
Growth in construction investment sharply gained 7.5% on an increase in residential building projects. South Korea posted a trade surplus for the 38th month in a row in March of 2015 by reaching US$8.4 billion, up from $7.8 billion in February and $3.5 billion a year earlier as imports dropped at a faster click than exports. Consumer price index inched up 0.4% in March from a year earlier, the slowest pace in nearly 16 years signaling that the economy remains gripped by flaccid private consumption.
Jobless rate dropped to 4% in March from a month earlier due to seasonal factors and more hiring by the manufacturing and service sectors. Volatility in the won-dollar exchange rate hit a three-year high in the first quarter of 2015 as the foreign exchange market seesawed due to speculation over a possible U.S. interest rate hike.
The exchange rate for Canadian Dollar averaged at 882.70 won in March, 2015, dropped 8.42 % from 963.86 in March, 2014 and slightly up by 0.61% from 877.36 in one month earlier.
South Korea’s housing starts in year-to-date February of 2015 increased 6.5% to 10,389 buildings from a year earlier 9,759 buildings owing to the continuous government measures to revamp the country’s property market. Housing permits in the same period inched up 1.1% to 11,575 buildings from a year earlier 11,453 buildings.
The number of wood building permits and wood building starts in year-to-date February of 2015 remarkably increased 24.4% to 1,896 buildings and 13.2% to 1,345 buildings respectively compared with those in 2014.
|Wood Building||2010||2011||2012||2013||2014||Jan.-Feb.||Jan.- Feb.||(%)|
|2014 YTD||2015 YTD|
|Number of Permits||10,922||11,686||11,826||11,710||13,062||1,502||1,869||24.4|
|Number of Starts||9,585||10,037||10,369||10,339||11,493||1,188||1,345||13.2|
Source: Ministry of Land, Infrastructure and Transport (as a percent compared to previous year same month and period)
Overall, the South Korean real estate market conditions are continuing to show signs of improvement.Apartment prices in South Korea increased at a faster rate in the first quarter of 2015 compared with a year earlier reflecting growing demand for property purchase amid low interest rates. Prices of apartments in the Seoul area shot up 0.75%, with its pace nearly doubling from 0.39% a year ago. Overall, apartment prices in the metropolitan area jumped 0.95%, compared with 0.54%.
South Korea’s overall home transactions shrank slightly from a year earlier in February, 2015 while the number of home transactions in the capital region surged to a nine-year high.The number of home transactions came to 78,864, down 0.4% in February from the same month last year. However, home transactions in capital Seoul jumped 10.4% on-year to 12,990 in February last month with the number for the entire capital region, including Gyeonggi Province and the western port city of Incheon, growing 4.2% to 37,502.
By type, transactions of apartment units, the most common form of housing in South Korea, slipped 1.6% on-year to 57,885 in February, while transactions of row and detached houses gained 4.6% and 0.7%, respectively, to 11,999 and 8,980.
BC softwood lumber export volume to South Korea for the first two months in 2015 dropped 15.5% to 31,610 cubic meters as compared to 37,418 cubic meters for the same period in 2014. The drop was largely attributed to the three-day traditional Lunar New Year’s Day break that fell in February this year, instead of January in 2014.
However, export value in year-to-date February continued to increase 2.6% to CAD$10.309 million as compared to CAD$10.047 million in the same period in 2014, owing to the strengthened Korean won against Canadian dollar.
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