Korea: Consumer confidence falls in June amid talk of a trade war between China and the U.S.

The Bank of Korea’s composite consumer sentiment index decreased to 105.5 in June from 107.9 points in May, the lowest reading since April 2017. Nevertheless, in June, the index remained above the 100-point threshold that separates optimism from pessimism among Korean households.

The decrease in June was largely driven by worsened sentiment regarding current and future domestic economic conditions. This may have been due to rising trade tensions between China and the U.S., two of Korea’s largest trading partners. Moreover, consumer sentiment regarding current and prospective living standards also deteriorated in June, likely due to the creeping increase in unemployment in recent months. Consumers’ optimism over prospective household spending fell in June. Optimism regarding prospective household income was unchanged from May.

Korea Private Consumption Forecast

FocusEconomics Consensus Forecast panelists expect private consumption to expand 2.7% in 2018, which is unchanged from last month’s forecast. For 2019, the panel sees private consumption growth at 2.5%.