Asia Regional Integration Center

GDP growth achieved a 3-year high of 2.9% in 2017, the rate doubling annually for a second time since 2015 boosted by higher exports and private consumption. Supported by stronger global trade, particularly a boost in demand for consumer electronics, merchandise exports reversed shrinkage by 1.8% in 2016 to increase by 13.2% in 2017, the highest growth rate since 2010. Net exports, having subtracted from growth in the previous 2 years, contributed 2.0 percentage points to economic growth in 2017. Private consumption increased as a tightening labor market lowered the unemployment rate to 3.8%, pushed wages up by 2.7%, and, with the help of higher asset prices, resulted to a positive consumer outlook. Despite lower government consumption in 2017, total consumption contributed 1.1 percentage points to growth. Industry added another 1.3 points, while agriculture contributed only 0.1 points despite being the fastest-growing sector.

GDP growth is forecast unchanged at 2.9% in 2018 and down marginally at 2.8% in 2019, supported by rising private consumption, robust public investment, and global expansion. Private consumption will be boosted by a 3.0% public sector wage increase at the beginning of 2018, which history teaches will be followed by private sector wage increases in the second half of the year and in 2019.