Optimism spreads to consumers
Consumer confidence in the Korean economy reached its highest in three years in May, the central bank said Friday, largely owing to hopeful expectations for the newly-elected Moon Jae-in administration.The composite consumer sentiment index stood at 108, up 6.8 points from the previous month, according to the Bank of Korea.
A reading above 100 points indicates the majority of survey participants maintain a positive outlook on the national economy, while a reading below 100 indicates a largely negative view.
“Consumer sentiment remained low ahead of the impeachment of the former president, but it has started to recover starting from February,” said Park Sang-woo, a director at the central bank. “People’s expectations for a recovery in the economy have risen after the presidential election, and I think the figure might have gone up due to improved exports as well.”
The index had fallen below the 100 benchmark in November to 95.7 and remained relatively low until March, when it recorded 96.7. In April, the index finally swung positive to 101.2.
The bank’s survey found that sentiment on household finances was still pessimistic. The figure in May was 92, up 2 points from the previous month.
Still, there are signs that households are optimistic that their situation will improve. In terms of future prospects for household finances and household income, the index rose from 98 in April to 103 this month, suggesting consumers are relatively optimistic about the future.
Future prospects for the labor market jumped from 86 in April to 113 in May. This was the highest since July 2008, and it appears that many believe they will be able to get jobs within six months.
The index for wages rose 7 points from a month ago to record 120. This was the biggest growth in a month and the highest figure since the bank began collecting the data.
“The consumer sentiment index has recovered back to where it was last year when the Choi Soon-sil scandal broke,” said Kim Doo-un, an economist at Hana Financial Investment, referring to the scandal that led to the ouster of President Park Geun-hye. “The index is rising as many hope that the Moon Jae-in administration will be able to boost the economy and labor market prospects in particular.” Moon’s major policies focus on job creation.
The majority of Koreans considered public utility charges one of the biggest factors that will have an impact on consumer prices in the near future. In the survey, 49.3 percent of respondents said public utility charges will boost consumer prices, and 47.1 percent said manufactured products’ prices would be one of the biggest factors in inflation. Multiple answers were allowed.
The Bank of Korea surveyed 2,200 households from May 12 to 19 to come up with the index.
BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]
with the Korea JoongAng Daily
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