South Korea:

Real GDP rose by +1.1% q/q in Q1 2018 (after -0.2% q/q in Q4 2017) supported by a recovery of exports (+4.4% q/q, after -5.3% in Q4) and a rise in investment (+3% q/q, up from -1.2% in Q4). In contrast, private consumption growth decelerated to +0.6% q/q in Q1 (from +1% in Q4). Going forward, advanced indicators and monthly economic data point to cautious optimism. Rising investment and an increase in minimum wages this year suggest continued improvement in domestic demand in the short run. Yet, increased risks for exports pose a threat to the current momentum. USD-denominated exports decreased by -1.5% y/y for the first time in 18 months in April, due to weaker ship exports. Business sentiment as measured by the manufacturing PMI weakened to 48.4 points in April (from 49.1 in March) due to reduced new orders.

South Africa:

Consumer confidence skyrocketed in Q1 to 26 points from -8 in Q4, out of the negative territory for the first time since Q3 2014. The political transition, the ZAR appreciation (+20% from November to February) and low inflation (+3.8% y/y in March) were the main triggers. The plan to implement a nationwide minimum wage (ZAR20 or USD1.6 per hour) was badly received. The first union in the country, COSATU, has strong ties with Ramaphosa’s party (ANC). But, the second union (SAFTU) has called for strikes. Unemployment (26.7% in Q4) and inequalities remain high and explain why the growth recovery is likely to be gradual (+2% in 2018, after +1.3% in 2017).

Austria:

The Austrian GDP expanded by a solid +0.7% q/q (seasonally and calendar adjusted) in the first three months of this year, following a slightly upward-revised +0.9% q/q in the fourth quarter of 2017. The economic upswing remains broad based, with both domestic demand and net exports delivering positive growth contributions. While private consumption registered a fairly modest increase of +0.3% q/q, gross fixed investment (including investment in machinery and equipment as well as construction) expanded strongly by +0.8% q/q. With capacity utilization clearly above the long-term average, companies continue to expand their production capacities. The external sector carried on growing, albeit at a somewhat slower pace than previously seen. Exports expanded by +0.8% q/q and imports increased by +0.5% q/q.

Mexico:

A first estimate has put real GDP growth in Q1 2018 above expectations at +1.1% q/q (+2.4% y/y) after +0.8% q/q in Q4 2017. This was the highest growth performance since Q3 2016. Services, which represent 63% of Mexico’s output, was the main driver of growth, accelerating to +1.2% q/q (after +1% in Q4). Non-seasonally adjusted y/y figures show a contracting manufacturing sector for the fourth quarter in a row. Yet, a rebound from Q4 2017 should be a sign of a recovery in the export-led industry, driven by a U.S. acceleration. On the consumer side, inflation (finally) started easing in 2018, after remaining above 6% for eight consecutive months; it stood at +5% y/y in March. Yet, NAFTA re-negotiations remain on an uncertain path and could trigger additional peso volatility, driving inflation back up. In addition, investment could be in a wait-and-see mode in Q2 as the frontrunner candidate for the July presidential election is running on a left of center and nationalist platform.

UK:

Q1 GDP growth was unexpectedly low at +0.1% q/q, down from +0.4% in Q4 2017. Although business confidence softened somewhat, the average Manufacturing PMI remained high at 55.2 points in Q1, suggesting growth of +0.3% q/q. The slowdown seems to reflect unusually cold weather in Q1, that triggered significant falls in the construction and retail trade sectors, and could be even larger than what the Office for National Statistics has estimated. However, the Q1 export performance is likely to have remained robust as suggested by export orders. And consumer spending should have been resilient as consumer confidence was less depressed and real purchasing power was supported by stronger wage growth (+2.8% y/y) and lower inflation (+2.3% y/y). The Bank of England is now in a difficult position to raise interest rates on 10 May. A move later on this year seems more realistic when a clearer picture of the nature of the strong Q1 slowdown is available.