Korean signals

Posted by: Paul Donovan

22 Jun 2020

Daily update

  • There is some news from South Korea (nothing to do with K-pop, about which economists know little). Export data for the first twenty days of June saw an improvement in the growth rate, although the numbers are still negative compared to last year.
  • The Korean data fits the likely pattern of global consumption as lockdowns ease. Trade should outperform economic growth, as services are hit more than manufacturing. Consumers will spend forced savings on durable goods – favoring electronics, for example – but the savings are probably not enough to have a huge impact on car sales. Growth will pick up, but the level of activity will still be lower than last year.
  • Financial markets have become nervous about virus clusters – but as ever it is fear of the virus, not the virus that matters. Cases in Germany and Australia have been localized, and so far there seems to be little evidence of widespread fear (either from consumers or from policy makers).
  • The data calendar ahead is an economic wasteland, with little of importance. Eurozone consumer confidence data can be dismissed as one of the more meaningless statistics on the planet, and it is hard to get too enthused about US home sales numbers.

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