Worst Consumers’ Business Sentiment Ever

Consumers are experiencing the worst economic crisis ever since the government’s official statistics started in 1998, according to a statistical research on their actual business sentiment.

According to the “September Consumer Prospect Research Result” published by the National Statistical Office on the October 14, the “Consumer Evaluation Index” showed current economic and living conditions compared to six months before, where it showed a number of 59.9, which is the lowest number recorded since the statistical research started in November of 1998, after the economic crisis in 1997.

If the Consumer Evaluation Index falls below 100, it indicates that the economic and living conditions have worsened compared to six months before. The index number has been below 100 since October last year for twelve months, and has stayed around 60 since this March. This is the first time for the index to fall to 50 which implies that the consumers’ actual living circumstances have worsened.

Especially among the Evaluation Index, business sector has fallen greatly from 45.5 to last month’s 51.2. Living circumstances sector also recorded 74.3, lowered from last month’s 76.6.

“Consumer Prospect Index” - prospects business, living conditions, and consumption and expenses for the next six months from now - fell from 92.0 of last month to 90.4, which is also the lowest number ever in four years and eleven month, since the start of statistical research.

Park Jong-gyu, a researcher at the Korea Institute of Finance said, “The business sentiment of the consumers has worsened much more than we have expected. Due to their actual income being decreased and sudden natural disasters such as the Typhoon Maemi, the consumers’ consumption mentality has shrunk extremely.”

Kwang-Hyun Kim kkh@donga.com