Korea: Improvement in consumer confidence extends into March
March 24, 2017
Consumer confidence continued to improve in March after dropping to its lowest level since the global financial crisis in January. According to the Bank of Korea’s latest Composite Consumer Sentiment Index (CCSI), the indicator rose from 94.4 in February to 96.7 in March, marking a 5-month high. The improvement came on the heels of upbeat data stemming from Korean exporting sectors and recent developments on the domestic political front. These culminated in mid-March, when Korea’s eight-member Constitutional Court unanimously upheld the decision by the National Assembly to impeach former President Park Geun-hye. Nonetheless, consumer confidence remains below 100, which indicates that pessimists still outnumber optimists.
Although Koreans remain mostly pessimistic, March saw a broad-based improvement across all sub-components. Consumer sentiment regarding current and future economic conditions improved considerably over the previous month. Their expectations concerning employment opportunities also rose notably compared to February. Likewise, consumer sentiment regarding current and future living standards increased slightly in March. Regarding savings and debt levels, however, no changes where observed compared to February. Ballooning household debt levels represent one of the biggest challenges for Korean policymakers, particularly at a time of increasing interest rates in the U.S.
Author: David Ampudia, Economist