Consumer confidence rebounds on eased geopolitical risks

Consumer confidence rebounds on eased geopolitical risks. October. 28, 2017 07:51. by Gun-Huk Lee gun@donga.com.

South Korea’s consumer sentiment, which had been shrunken by North Korea’s series of reckless provocations, has rebounded for the first time in three months.

The Bank of Korea announced on Friday the composite consumer sentiment index (CCSI) has risen to 109.2 for October, up 1.5 points from the previous month. A reading above the 100-mark means more consumers are optimistic about economic conditions in coming months than pessimistic. The result was based on a survey conducted nationwide from October 13 to 20 after the Chuseok holidays.

The index, once reached 111.2 during July, worsened in August and September after North Korea conducted its latest nuclear test and launched ballistic missiles. There were concerns over significant decrease in the country’s exports amid China’s continued retaliation opposing the THAAD deployment in South Korea and growing possibility that the KOR-US Free Trade Agreement could be revised or abolished. It is now viewed that the consumer confidence index has edged up as tensions subsided and domestic consumption began improving during the national holidays.

A separate index measuring the public feeling toward household debts in the coming six months has dropped to 96, an all-time low since the Bank of Korea started surveying in 2008. This means more households will have difficulty taking out a loan as the South Korean government came up with a comprehensive measure to tighten loan rules to address the nation’s soaring household debts and the central bank hinted at a hike of the key interest rate. On the other hand, the consumer sentiment index toward home prices has climbed to 110 this month, increased by seven points from the previous month, indicating more consumers are expecting house prices to rise despite the government’s strong measures to stabilize the overheated real estate market.