Korea: Consumer confidence slips in December but remains high
December 27, 2017
The consumer confidence index decreased slightly in December after hitting a seven-year high in November. The index came in at 110.9 points in December, below November’s 112.3 points. Nevertheless, consumer confidence remained comfortably above the 100-point threshold that separates optimism from pessimism among Korean households.
Although still impressively high, the lower index reading in December was due to weaker consumer sentiment regarding current and future domestic economic conditions and living standards. Sentiment regarding future household income and spending, however, were unchanged from November.
Consumer confidence in November had benefitted from lower tensions between North Korea and South Korea. This period of relative calm broke on 29 November when the North, in its first test since 15 September, launched its highest-ever intercontinental ballistic missile. These higher tensions, coupled with the Bank of Korea’s first base rate hike in over six years on 30 November—from 1.25% to 1.50%—may have had a dampening effect on otherwise-high consumer confidence in December.
Author: Edward Gardner, Economist