Recently, speculation about a possible economic slowdown has grown as stock prices have plummeted on worsening US economic indicators. At the same time, soaring prices are raising prospects of economic instability. How will this economic trend affect the Korean economy?
Today, we'll look at economic prospects according to the results of the quarterly Consumer Sentiment Index survey conducted by SERI.
The Consumer Sentiment Index, unsurprisingly, measures consumer confidence. Figures higher than 50 indicate that consumers are positive about prospects for their personal consumption, while a figure lower than 50 indicates that consumers are negative. The Consumer Sentiment Index for the first quarter of 2008 was 51.1, down 2.3 points from the previous quarter.
This outcome was unexpected, as it was thought that consumer sentiment would have headed even further south on concerns over jitters in the economy. What do these results mean? Consumer sentiment in the first quarter was lower than in the previous quarter because consumers are negative about the current situation.
The Consumer Sentiment Index consists of five indicators about the present and the future. The present economic condition index was 36.0, 10.6 points down from the previous quarter. In particular, consumers appear to be increasingly concerned about price hikes
About 63% of total households surveyed responded that prices have risen dramatically. 81% of total households expected that prices would rise by an even higher range in 2008 vis-à-vis 2007. 59% responded that they would reduce consumer spending if prices continued to rise, indicating that price hikes will negatively affect consumption. The Index dropped for every income level, with the greatest decline found in the bottom income bracket, where the figure fell below 50. This reflects the greater sensitivity of lower income people to rising prices and shifts in the economy.
Although consumers remain negative about the current situation, the Consumer Sentiment Index overall still remained over 50 because, consumers’ still maintain positive expectations for the future. Out of five indicators comprising the Consumer Sentiment Index, the expected economic condition index was 65.2, 3.1 points up from 62.1 in the previous quarter. Although there have been many adverse external factors, including a sharp drop in the stock markets, inflation in China, and worsening in the US economic indicators, many consumers have high expectations that the new administration’s economic policies will revitalize the domestic economy in the future.
In sum, although the consumer sentiment index is gradually declining, it is still higher than the benchmark level. Consumers remain positive about the future despite being negative about the present economic condition. At present, consumers are looking to see whether economic policies adopted by the new government will provide real solutions to their problems, particularly rapidly rising prices, and instability for lower income people.
Thank you for watching. I'm Hyung-Min Jung.
Copyright ⓒ 2008 Samsung Economic Research Institute. All rights reserved.
Today, we'll look at economic prospects according to the results of the quarterly Consumer Sentiment Index survey conducted by SERI.
The Consumer Sentiment Index, unsurprisingly, measures consumer confidence. Figures higher than 50 indicate that consumers are positive about prospects for their personal consumption, while a figure lower than 50 indicates that consumers are negative. The Consumer Sentiment Index for the first quarter of 2008 was 51.1, down 2.3 points from the previous quarter.
This outcome was unexpected, as it was thought that consumer sentiment would have headed even further south on concerns over jitters in the economy. What do these results mean? Consumer sentiment in the first quarter was lower than in the previous quarter because consumers are negative about the current situation.
The Consumer Sentiment Index consists of five indicators about the present and the future. The present economic condition index was 36.0, 10.6 points down from the previous quarter. In particular, consumers appear to be increasingly concerned about price hikes
About 63% of total households surveyed responded that prices have risen dramatically. 81% of total households expected that prices would rise by an even higher range in 2008 vis-à-vis 2007. 59% responded that they would reduce consumer spending if prices continued to rise, indicating that price hikes will negatively affect consumption. The Index dropped for every income level, with the greatest decline found in the bottom income bracket, where the figure fell below 50. This reflects the greater sensitivity of lower income people to rising prices and shifts in the economy.
Although consumers remain negative about the current situation, the Consumer Sentiment Index overall still remained over 50 because, consumers’ still maintain positive expectations for the future. Out of five indicators comprising the Consumer Sentiment Index, the expected economic condition index was 65.2, 3.1 points up from 62.1 in the previous quarter. Although there have been many adverse external factors, including a sharp drop in the stock markets, inflation in China, and worsening in the US economic indicators, many consumers have high expectations that the new administration’s economic policies will revitalize the domestic economy in the future.
In sum, although the consumer sentiment index is gradually declining, it is still higher than the benchmark level. Consumers remain positive about the future despite being negative about the present economic condition. At present, consumers are looking to see whether economic policies adopted by the new government will provide real solutions to their problems, particularly rapidly rising prices, and instability for lower income people.
Thank you for watching. I'm Hyung-Min Jung.
Copyright ⓒ 2008 Samsung Economic Research Institute. All rights reserved.
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