Korea Economy, Housing & Lumber Shipments
Korea Economic Update
Entering the New Year, the South Korean economy finds itself besieged by a complex set of external and internal risks such as China’s deepening slowdown, a prolonged downturn in international crude prices and the South Korean won’s appreciation against major currencies aside from the U.S. dollar. These risks are continuously threatening and hampering South Korea’s economic growth, especially a recovery in the country’s exports.
South Korean government estimates the country’s GDP in 2016 will grow by 3.1% from last year’s growth of 2.6% while many domestic and foreign economists have suggested far lower growth forecasts than the government’s outlook range from 2.2% to 2.8%.
The country’s exports and imports are projected to gain by 2.1% and 2.6%, respectively, in 2016, with current account surplus expected to be cut to $98 billion. But the increase may be largely seen as reflecting a low base effect as South Korea saw its exports and imports shrank by 7.9% on-year to reach $527 billion and 16.9% on-year to $437 billion last year, marking a record high of $90.4 billion of annual trade surplus.
Facilities and construction investments are projected to increase by 4.4% and 4.3%, respectively, in 2016, compared to 5% and 4.2% in 2015.
Private spending in 2016 is estimated by the government to increase 2.4%, up from 2.1% last year.
The pace of the consumer price hike is forecast to pick up 1.5% in 2016 from a record low margin of 0.7% on-year last year, slightly lower than the 0.8% fall in 1999 in the aftermath of the 1998 Asian financial crisis.
Korea Housing Construction Update
South Korea’s housing starts in year-to-date November of 2015 remarkably increased 21% to 103,632 buildings from a year earlier 85,661 buildings, a sign that the country’s real estate market is continuing to make headway. Housing permits in the same period also increased 21.1% to 113,027 buildings from a year earlier 93,328 buildings. November marked the 11th consecutive month of an on-year increase showing a 49.6% on-year increase to 667,163 units vis-à-vis 445,984 units reported for the same period in 2014. Reflecting the rise in demand for dwellings, the number of actual groundbreakings for new homes throughout the country came to a 42% on-year increase to 634,325 units.
The number of wood building permits and wood building starts in year-to-date November of 2015 also increased 18.2% to 14,136 buildings and 18.3% to 12,550 buildings respectively compared with those in 2014.
South Korea’s home sales reached an all-time high in 2015 buoyed by a series of government measures to boost the local property market which lifted reconstruction regulations and eased other financial hurdles to let people easily borrow money and buy or rent houses.
The number of home transactions surged 18.8% on-year to 1,193,691 in 2015, marking the largest annual tally since 2006.
Home transactions in Seoul and its surrounding areas led the boom in the property market in 2015, spiking 32.4% on-year to 611,782. In rural areas, the figure totaled 581,909 in 2015, up 7.2% from a year earlier.
Home transactions involving apartment units jumped 14% on-year to 808,486 in 2015, while transactions involving detached houses also gained 25.8% to 167,926.
BC Lumber Shipments
Owing to increased WFC housing starts, BC softwood lumber export volume to South Korea for the first eleven months in 2015 remarkably increased 16.15% to 274,616 cubic meters as compared to 236,435 cubic meters for the same period in 2014. As a consequence of increased export volume, export value in year-to-date November also increased 20.61% to CAD$74.973 million as compared to CAD$62.159 million in the same period in 2014.