Consumers turn more negative
Consumer sentiment in the country dipped to a 21-month low in November, the lowest level since February last year, according to the central bank on Tuesday.
The Bank of Korea (BOK) said that the composite consumer sentiment index (CCSI) for this month stood at 96, down 3.5 points from the previous month.
A reading above 100 points indicates that a majority of survey participants have a positive outlook on the national economy, while a reading below 100 indicates that most have negative views.
The BOK mentioned that the public’s concerns center on an economy that is losing momentum and the possibility of a protracted downturn.
“People are worried that the country’s economy will enter a downward cycle. The ongoing trade war between the United States and China and the tepid jobs market are also contributing to the pessimism,” a bank official said.
New jobs added in October stood at 64,000, down 77.1 percent compared to the same month last year. In 2017, Korea added more than 300,000 jobs every month, but the figure started collapsing in 2018.
The index for people’s view on current economic conditions dropped five points to 62, while the sentiment for overall economic conditions for the coming six months went down five points to 72 this month.
A widening income gap has weighed on consumer sentiment. The gap was reported earlier this month at its widest in 11 years.
The average income of the top 20 percent of earners was 5.5 times that of the bottom 20 percent in the third quarter of 2018. This is the biggest difference since 2007, when the incomes of the top 20 percent were 5.52 times those of the bottom 20 percent.
With the weak economic indicators, major international institutions have lowered their estimates for the economy both this year and next year.
The International Monetary Fund (IMF) trimmed its outlook for Korea’s economic growth in 2018 to 2.8 percent from 3 percent, citing trade tensions between the world’s two largest economies, weak momentum in global trade and financial turbulence in emerging countries.
Moody’s anticipates 2.5 percent growth this year and 2.3 percent next year.
BY PARK EUN-JEE [firstname.lastname@example.org]