Korea GDP to climb to 2.8%

This will exceed government's forecast of 2%.

According to UBS, the Lunar New Year effect should be quite strong this year and will flatter much of the data in January and depress it in February. 

Last year the holiday fell in January, but this year it will be celebrated in February. So don’t get too carried away if there's some surprisingly good numbers in January followed by poor numbers in February.

Also, exports continue to show signs of turning up sequentially in recent months. That’s a positive and frankly speaking recent weakness in JPY isn’t going to change that.

Here's more from UBS:

Finally, house prices fell for the 7th consecutive month and household delinquencies remain in an upward trend. So despite improving exports there is still no evidence that it is stabilizing the housing and construction market; hence, we still think one or two rate cuts going forward are likely.

4Q GDP accelerated to 1.5%q/q SAAR. Most of the acceleration came from inventories and a pickup in consumption in response to temporary tax incentives that were to expire by year end.

GDP is the broadest measure of economic activity. It is strongly correlated with the profit cycle and provides important clues about inflation and the direction of policy. Strong GDP often suggests policy will tighten; weak GDP implies a policy bias for pro-growth.

We expect GDP to improve modestly to 2.8% versus the government’s advanced estimate of 2.0% for 2012.