Slowing economy causes consumer sentiment to dive

Korea’s consumer sentiment fell sharply in May, data from the Bank of Korea (BOK) showed Tuesday, amid growing concerns over an economic slowdown and the escalating trade war between the United States and China.

The composite consumer sentiment index came to 97.9 for the month, down 3.7 from the previous month, according to the BOK.

The reading marks the lowest since January, when the index stood at 97.5. A reading above 100 means optimists outnumber pessimists while a figure below the benchmark means the opposite.

“The consumer sentiment index dropped amid a dip in related indicators due to the escalation of the U.S.-China trade dispute, poor economic performance and a drop in stock prices that worsened people’s outlook on their own financial condition,” the BOK said in a press release.

A separate index measuring people’s sentiment toward their current economic conditions came to 91 in May, down 2 from a month before, while another index gauging their expectations for conditions six months down the road shed 3 to 92 over the cited period.

More people also expected their income to dwindle over the next six months with the index measuring sentiment toward future income losing 2 to 97 in May.

The latest report comes about a month after the central bank said the local economy contracted 0.3 percent in the first quarter of the year from three months earlier, the worst performance in over a decade.

The index measuring people’s outlook on overall economic conditions lost 5 from the month before to 69 in May, while the index on their outlook on future economic conditions lost 6 to 75.

People’s sentiment for job opportunities also remains pessimistic as the index for employment opportunities sheds 3 points to 80.

Still, the figure for housing price prospects registered 93, up 6 points compared to a month ago despite the cooling real estate market.

The monthly survey was conducted from May 10 to 17, involving 2,343 households across Korea.

Faced with the unfavorable economic conditions, President Moon Jae-in called for the need to use extra budgets and take measures to promote corporate investment during a meeting with Finance Minister Hong Nam-ki.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]