Minister pushes buyingConsumer sentiment about the economy is dire and could become a serious hindrance to the ongoing economic recovery, said Finance Minister Hyun Oh-seok at a meeting on economic affairs yesterday.
“Amid a contraction in consumer sentiment after the Sewol ferry disaster, the service industry is experiencing mounting difficulties due to low sales,” Hyun said at the meeting.
His remarks followed the Bank of Korea’s announcement on Tuesday that the Consumer Sentiment Index (CSI) recorded an eight-month-low this month.
The bank said that the CSI fell three points to 105 in May compared to the previous month, marking the lowest point since September.
“Especially wholesalers, retailers, diner owners and accommodation facility operators are having a hard time,” the minister said.
A recent survey of small merchants by the ministry showed that their daily sales had fallen by more than 30 percent between April 16 and May 12 compared to a month earlier.
The minister added that gloomy sentiments from economic players could hurt the overall economy.
“When the market sentiment is contracted, consumption and investment could slow down, affecting the overall economy and leading to a decrease in the gross national income,” he said.
Hyun is scheduled to visit Namdaemun Market in central Seoul today to hear directly from small merchants about their difficulties.
On Tuesday, the government-run Korea Development Institute forecasted 3.7 percent GDP growth for this year, saying that the Korean economy is recovering thanks to a robust growth in exports. But the report cited a number of risk factors that could threaten the recovery.
“The current slowdown in private consumption is expected to be a major drag on this year’s economic growth,” the report warned. “Although private consumption will gradually expand, its growth rate will remain below GDP growth rates.”
The minister urged the public to return to normal consumption activities.
“The government will prepare various measures to restore consumer confidence after hearing from people at the market,” Hyun said.
At the meeting, the minister said related government agencies are currently discussing measures to boost the logistics services industry.
“The government will soon come up with a plan to improve the industry to produce high-quality services,” he said.
BY SONG SU-HYUN [email@example.com]