Korea’s January export seen to recover from slump

Huge 23% growth forecasted.

According to Nomura, this Friday, it looks for Korean exports (in USD value terms) to surge 23.0% y-o-y in January (Consensus: 9.4%), from a 5.7% drop in December, partly due to a positive base effect from more working days because of the Lunar new year holidays.

Here’s more:

Even after the working-day adjustment, we expect underlying export growth to likely rise to 12.6% y-o-y in January from 7.5% in December as global demand, especially from the US, China and ASEAN, continues to recover.On Wednesday, we expect industrial output to gain 0.5% (sa) m-o-m, or 4.2% y-o-y in January, in contrast to consensus 

(Bloomberg: -1.8% m-o-m, +1.2% y-o-y). Although automobile production fell by 5.6% y-o-y in December due to fewer working
days, we expect electronic-sector production to gain substantially in real terms. If we are right, this would suggest an upward
revision to Q4 GDP, which gained 0.4% (sa) q-o-q, or 1.5% y-o-y, after a 0.1% q-o-q, or 1.5% y-o-y rise in Q3.

Despite lower gasoline prices (partly supported by a stronger KRW), recent price hikes in some foods and public service fares,
along with higher housing rents, should push CPI inflation to1.6% y-o-y in January from 1.4% in December. We maintain our call
that the Bank of Korea will keep rates on hold at 2.75% through 2013 as growth and inflation rise only modestly from a low base.