Consumers were gloomier in Dec.Consumer confidence in the Korean economy fell to the worst level since the global financial meltdown in 2009 due to growing uncertainties about the effect of the Choi Soon-sil scandal on the running of the country and the recent interest hike in the United States.
The composite consumer sentiment index stood at 94.2 in December, down 1.6 points from the previous month, the Bank of Korea (BOK) said Tuesday. The figure fell to its lowest level in 7 years and 8 months, or since April 2009, when it was also 94.2.
A reading above 100 points indicates the majority of survey participants maintain a positive outlook on the economy, while a reading below 100 indicates a negative view.
“It appears that growing uncertainties coming from within the country and overseas, including the political scandal surrounding the president and Choi Soon-sil and the recent interest hike in the United States, have dragged down consumer sentiment this month,” said an official at the central bank.
In November, the figure fell below the 100 level for the first time since June, when it was 98.8. The index rose to 100.9 in July and remained over 101 from August to October.
According to the survey, Korean households now feel that they are less likely to spend money on clothes, healthcare and leisure activities. The index measuring how they will spend in the future specifies different types of spending. The figure for clothes dropped 1 point from 98 in November to 97 this month. The figure for healthcare and leisure activities both fell 1 point to 111 and 86 respectively.
Spending and travel and education-related expenses were the only two major categories that went up. The figure for travel rose 1 point to 89 and the index for education also rose 1 point to 108.
The BOK survey found sentiment on household finances pessimistic, and the index dropped from 90 in November to 89 this month. In terms of future prospects for household finances and household incomes, the index remained unchanged at 98.
The BOK surveyed 2,200 households from Dec. 13 to 20.
Meanwhile, a recent study found the local home shopping sector was hit hard by the ongoing political scandal in the country, which led more people to watch news programs instead of home shopping channels.
According to the Korea Credit Finance Association Research Institute Tuesday, card transactions for home shopping dropped 63.3 percent year on year from 414.4 billion won ($343.6 million) in November last year to 151.9 billion won last month.
BY KIM YOUNG-NAM [firstname.lastname@example.org]