Korea's export growth to edge up 3.0% in March

Will it finally pick-up its momentum?

According to Nomura, it expects exports (USD custom basis) to increase by 3.0% y-o-y in March from 0.6% in the combined January-February period, supported by solid demand from the US, China and South Asia. 

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All in all, we view the weaker January industrial output data as temporary and expect the growth momentum to carry over into Q1 2013. 

Korea‟s GDP growth bottomed in Q3 2012, supported by improvements in global demand and domestic consumption. Only fixed asset investment (both business and construction investment) continued to fall.

This is somewhat unusual, as fixed asset investment had moved in line with exports and consumption before H2 2012. We judge that the uncertainty of the new government policy has helped to delay some business investment.

Also, a slump in property markets reduced construction investment. We expect the new government to announce targeted, micro-level stimulus measures for property markets and investment in SMEs.

This, in addition to increases in social welfare spending for low-income families, should support domestic demand. Also, we expect exports (USD custom basis) to increase by 3.0% y-o-y in March from 0.6% in the combined January-February period, supported by solid demand from the US, China and South Asia.

All in all, we view the weaker January industrial output data as temporary and expect the growth momentum to carry over into Q1 2013.