Korea's industrial output to edge up 0.7%

As export growth is expected to climb 3%.

According to Nomura, it forecasts January-February industrial output (to be released on 29 March) to rise by 0.7% y-o-y after a 0.1% drop in Q4. Seasonally adjusted industrial output should gain 2.0% m-o-m in February, more than offsetting the 1.5% decline in January. 

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Industrial output should increase further as we expect export growth (USD custom basis) to rise to 3.0% y-o-y in March from 0.6% in January-February combined, supported by solid demand from the US, China and South Asia. Working-day adjusted daily export growth should jump to 7.6% y-o-y in March from 1.7% in the previous two months.

Korea‟s industrial electricity consumption increased by 0.5% y-o-y in January and February combined following a 0.9% gain in Q4.

From an economic perspective, we do not expect incoming macro data to suggest the need for a supplementary budget.

However, for whatever reason, if the government formulates an extra budget, it would support GDP growth, and therefore reduce the need for a rate cut. We maintain our call for no rate cuts through 2013.