Sentiment of consumers inched up in December
But confidence in the real estate market hit its lowest level since 2013 as a result of tougher government regulations on speculation and higher real estate taxes.
According to the Bank of Korea (BOK) on Friday, the composite consumer sentiment index (CCSI) in January was 97.5, which was up 0.6 points from December.
A reading above 100 indicates that majority of respondents are optimistic about the economy while a reading below 100 indicates the opposite.
The improvement in confidence reflects growing expectations for the government to help boost the economy. Additionally, resuming trade negotiations between the United States and China and the slowing growth of prices of consumer necessities had a positive effect on this month’s confidence level, according to the central bank. However, as the index showed, most respondents were negative about economic prospects.
The confidence index has remained below 100 since hitting 99.2 in October.
The confidence report came a day after the central bank lowered its outlook for this year’s economic growth from 2.7 percent to 2.6 percent citing slowing growth in the world’s economy and weaker-than-expected exports.
The International Monetary Fund recently slashed its outlook for global economic growth 0.2 percentage points to 3.5 percent.
The BOK’s outlook has been relatively higher than that of private institutions including Hyundai Research Institute and LG Economic Research Institute, which forecast Korea’s growth this year at 2.5 percent.
Confidence in wages and jobs went up. Expectation for wage increases reached 122, up three points from December, while expectations regarding jobs hit 78, up four points and the first increase in three months.
Confidence of the current state of the economy rose three points to hit 65 compared to six months earlier. In regard to respondents’ outlook on the economy, the figure rose four points to reach 76 compared to six months earlier.
The spending outlook remained the same as in December at 109.
However, confidence in real estate was dragged down with real estate transaction falling along with real estate prices.
Confidence in housing prices hit 91, the lowest level since data started being compiled in its current form in 2013. Additionally, real estate market confidence has been falling for five consecutive months since the government introduced regulations and higher assessed values on standalone houses, which on national average rose 9 percent and in Seoul 17 percent compared to last year.
BY LEE HO-JEONG [firstname.lastname@example.org]
with the Korea JoongAng Daily
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