Comments on: Is South Korea de-coupling? http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html#comment-56255 Edward Harrison Fri, 24 Apr 2009 12:53:00 +0000 http://www.creditwritedowns.com/?p=8030#comment-56255 But, Thomas you hit on something regarding GDP in South Korea that applies to the U.S.. It is the change in GDP that gets reported. No one cars about the actual 'stock.' People care about the 'flow.' That's why when an economy gets hammered like the Koreans have done, it gets MUCH easier to outperform expectations (recency effect means most people are anchored to downside expectations). This is a major reason I see a cyclical upturn in the U.S. in Q4 2009 or Q1 2010 as likely. The q-o- and y-o-y comparisons will be very favorable. But, Thomas you hit on something regarding GDP in South Korea that applies to the U.S.. It is the change in GDP that gets reported. No one cars about the actual ‘stock.’ People care about the ‘flow.’ That’s why when an economy gets hammered like the Koreans have done, it gets MUCH easier to outperform expectations (recency effect means most people are anchored to downside expectations).

This is a major reason I see a cyclical upturn in the U.S. in Q4 2009 or Q1 2010 as likely. The q-o- and y-o-y comparisons will be very favorable.

]]> By: Thomas http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html#comment-56254 Thomas Fri, 24 Apr 2009 12:08:00 +0000 http://www.creditwritedowns.com/?p=8030#comment-56254 Here's another thought: I am looking at the GDP indicators at the back of The Economist, and it appears that Korea's economy got hammered in Q4 like few others. Annualised q-o-q contractions were: -20.8% in Korea -12.1% in Japan -8.2 % in Germany -6.3 % in US So maybe the relatively solid Q1 numbers are just a "technical reaction" following an abysmal Q4. Or in other words: If the US economy contracts 14 % on an annualised basis in Q1, it will have the same 6-month-performance as the Korean economy... Here’s another thought: I am looking at the GDP indicators at the back of The Economist, and it appears that Korea’s economy got hammered in Q4 like few others. Annualised q-o-q contractions were:

-20.8% in Korea
-12.1% in Japan
-8.2 % in Germany
-6.3 % in US

So maybe the relatively solid Q1 numbers are just a “technical reaction” following an abysmal Q4. Or in other words: If the US economy contracts 14 % on an annualised basis in Q1, it will have the same 6-month-performance as the Korean economy…

]]> By: Thomas http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html#comment-56253 Thomas Fri, 24 Apr 2009 12:00:00 +0000 http://www.creditwritedowns.com/?p=8030#comment-56253 From the Wirtschaftswoche article: "Korean shipbuilders recorded a sales increase of 61 percent in March." Aren't they lucky that all those firm orders were placed long ago? I bet nobody is ordering any new vessels right now, and nobody will for quite a while. Therefore, I would argue that a shipyard sales increase is quite meaningless, because it simply reflects completion of old orders. From the Wirtschaftswoche article: “Korean shipbuilders recorded a sales increase of 61 percent in March.”

Aren’t they lucky that all those firm orders were placed long ago? I bet nobody is ordering any new vessels right now, and nobody will for quite a while. Therefore, I would argue that a shipyard sales increase is quite meaningless, because it simply reflects completion of old orders.

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html#comment-56252 Edward Harrison Fri, 24 Apr 2009 11:59:00 +0000 http://www.creditwritedowns.com/?p=8030#comment-56252 Thomas, that is q-o-q growth. thanks for the correction. Thomas, that is q-o-q growth. thanks for the correction.

]]> By: Thomas http://www.creditwritedowns.com/2009/04/is-south-korea-de-coupling.html#comment-56251 Thomas Fri, 24 Apr 2009 11:56:00 +0000 http://www.creditwritedowns.com/?p=8030#comment-56251 I believe you got something wrong: Korea did not grow 0.1 % year-on-year, but quarter-on-quarter. GDP apparently declined 4.3 % as compared to Q1 2008, which is a very significant contraction. The Korean central bank projects a 2.4 % decline of GDP for the full year as compared to 2008. (But I do agree with your point that a flat Q1 GDP compared to Q4 is quite an achievement, compared to what the rest of the world is seeing in Q1.) Source: http://www.google.com/hostednews/afp/article/ALeqM5hSQWqZqZPOJNNXGa3HJ5YcsCN4rA I believe you got something wrong: Korea did not grow 0.1 % year-on-year, but quarter-on-quarter. GDP apparently declined 4.3 % as compared to Q1 2008, which is a very significant contraction. The Korean central bank projects a 2.4 % decline of GDP for the full year as compared to 2008.

(But I do agree with your point that a flat Q1 GDP compared to Q4 is quite an achievement, compared to what the rest of the world is seeing in Q1.)

Source:
http://www.google.com/hostednews/afp/article/ALeqM5hSQWqZqZPOJNNXGa3HJ5YcsCN4rA

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