The Korean economy is often a bellwether of global trends, reflecting its openness* and wide-ranging industrial activities spanning electronic equipment, vehicles and capital goods. The Federation of Korean Industries (FKI) expected business conditions indicator rose sharply in November, with strength focused on manufacturing, particularly exports. This suggests that global trade and industrial output are regaining momentum, in line with a forecast based on monetary trends – see chart.

China is Korea’s largest export market, accounting for 26% of shipments in 2014 (versus 11% for the US). The rise in Korean optimism may indicate that Chinese demand is beginning to respond to monetary / fiscal policy easing.

*Exports of goods and services = 51% of GDP in 2014.