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Korea Consumer Confidence February 2020

Korea: Consumer confidence falls sharply in February

The Bank of Korea’s composite consumer sentiment index decreased to 96.9 in February—the largest drop in a single month since June 2015—from 104.2 in January. The strong reverse in sentiment was likely driven by the coronavirus outbreak, which has hit Korea hard in recent weeks, despite strong-than-expected economic activity in the fourth quarter last year. Consequently, the index fell below the 100-point threshold that separates pessimism from optimism among households.

Consumer sentiment in February concerning both current and future domestic economic conditions plunged in February. Moreover, consumers were more pessimistic regarding their current and future living standards in February, while their view towards future household income and spending also dipped.

In the short-term the coronavirus outbreak will likely continue to suppress household confidence. Nevertheless, both monetary and fiscal stimulus should support consumer confidence this year. Moreover, less uncertainty over the U.S.-China trade war should also boost sentiment among households.

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