Consumer Sentiment Still Very Weak

Consumer sentiment on the Korean economy is still very low, which has been found by recent statistics. According to statistical data released by the Korea National Statistical Office on Jan. 14, titled ‘The results of the 2002, December consumer’s expectation on the economy,’ consumer expectation index posted 94.8 point. Consumers were asked how they would expect of the Korean economy and their financial conditions over the next six months by the survey.

Although the 94.8 figure marked a little increase compared to the November’s figure 93.4, it has remained unchanged below 100 in the third consecutive month since last October.

Less than 100 point of the consumer sentiment index means that the number of Korean households which place pessimistic views on the overall economy and individual financial conditions in the next six months is more than that of Korean household which expressed just the opposite.

The December figure of consumer sentiment on the overall economy rose to 87.4 by 5.5 points increase from the previous month. However, pessimism is still prevailing among Korean consumers.

Expectation on individual financial conditions marked 98.2 point by two points increase compared to the previous month.

Respondents with pessimistic or optimistic views on improvement of financial conditions down the road were equally divided.

Consumer indices on consumer spending, purchase of durable consumer goods, and eating out and leisure were 103.3, 91.0, and 89.5, respectively, and all of which showed a drop compared to two months earlier. The diminishing figures show the growing number of consumers intended to cut their spending.

By income bracket, indices of consumer expectation with incomes of less that one million won and of more than 2 million won to 2.49 million won showed 86.9 and 95.6 points, respectively, which can be interpreted that the lower bracket consumers belong, the more they concern over their financial conditions.

So called ‘Consumer assessment index’, which shows consumers’ evaluations on the present economy and their financial conditions compared to six months ago, marked 81.2 points.

In spite of a 0.3 point increase from the previous month, 80.9 points, the increased figure showed far less than 100 points, which means there are more consumers who feel that they are worse off than those who feel they are now better off.

Kwang-Hyun Kim kkh@donga.com