Revised estimates for South Korean GDP show the economy contracted 0.2 percent on the quarter in the three months to march, unchanged from the advance estimate and also confirming growth weakened from the 0.1 percent increase recorded in the three months to December. GDP was flat on the year in the three months to March, just above the advance estimate of a fall of 0.1 percent and well down from growth of 1.2 percent in the three months to December.

The Bank of Korea cut its main policy rate by 25 basis points from 2.75 percent to 2.50 percent at its policy meeting last week, in line with the consensus forecast. Officials made little change to their inflation forecasts but revised down their forecast for GDP growth this year from 1.5 percent to 0.8 percent, citing the impact on external demand of the recent escalation in global trade tensions. They also noted that there is significant uncertainty about the outlook.

GDP data are a comprehensive measure of South Korea’s overall production and consumption of goods and services. GDP serves as one of the primary measures of overall economic well-being. GDP calculates the total market value of goods and services produced in South Korea within a given period after deducting the cost of goods and services used up in the process of production. Therefore, GDP excludes intermediate goods and services and considers final aggregates only.

Gross domestic product (GDP) can be measured using three approaches, namely the production, income and expenditure approaches. The production measure of GDP is derived from firm level data and estimates the value added by all producing industries in the South Korea economy. The income measure of GDP is derived from earnings data and estimates how the income earned from these producing industries is then distributed throughout the economy as returns to labor, capital and government. The expenditure measure of GDP is derived from data estimating spending on goods and services by final end users and includes consumption, investment and exports minus the value of imports.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.