Download South Korean Consumer Confidence Is at 9

Bloomberg
2009-4-28
South Korean Consumer Confidence Is at 9-Month
High
By Kevin Cho
South Korean consumer confidence in April climbed to the highest in at
least nine months as shares gained and the government $37 billion
stimulus coupled with record interest-rate cuts stoked the economy.
The household sentiment index rose to 98 from 84 in March, the Bank
of Korea said in Seoul today. That’s the highest level since the bank’s
monthly series began in July 2008. A reading less than 100 indicates
pessimists outnumber optimists.
Improved confidence adds to signs a slump across the region may be
abating as government rescue packages underpin domestic demand and
Asia’s exports start to recover. South Korea’s economy unexpectedly
grew 0.1 percent in the first quarter, avoiding a technical recession
following the previous quarter’s 5.1 percent slump.
“Financial policies deserve a lot of credit for pulling the economy out of its
steep fourth-quarter slide,” Tim Condon, Asia chief economist at ING
Groep NV, wrote in a report. “Fiscal stimulus and rate cuts have
preserved employment, the foundation of domestic demand, well above
what would have been expected given the industrial-production crash.”
Goldman Sachs Group Inc., UBS AG, Deutsche Bank AG and Citigroup Inc.
have all raised their 2009 gross domestic product forecasts for South
Korea since the central bank released first- quarter GDP figures on April
24.
Shares Gain
Korea’s Kospi stock index fell 0.04 percent to 1,339.56 at 11:52 a.m. in
Seoul and has gained 19 percent in 2009. The won, which fell 0.4 percent
to 1,346.50 per dollar today, has advanced 8.2 versus the U.S. currency
in the past six months.
The consumer confidence index is based on a survey of 2,200 South
Korean households in 56 major cities conducted by mail and telephone
from April 14 to April 21.
“Signs of a bottoming in growth have become much clearer and broader,”
Citigroup’s Seoul-based economists Suktae Oh and Morgan Kim wrote
in a report. They forecast South Korea’s economy will shrink 2 percent
this year, compared with a previous prediction of a 4.8 percent
contraction.
Spending by households climbed 0.4 percent in the first quarter,
government spending gained 3.6 percent and construction increased 6.1
percent, last week’s GDP report showed.
The central bank cut its interest rate by an unprecedented 3.25
percentage points since October to a record-low 2 percent.
The government is awaiting parliamentary approval for an additional 17.7
trillion won ($13 billion) spending package announced last month that
includes cash handouts, job-market support and low interest-rate loans.
Exports Recovering
The most recent economic indicators show South Korea’s exports,
which make up 60 percent of GDP, climbed 10.5 percent in March from
February, and factory production gained for a second month in February.
“Asia’s economies are no longer in free-fall,” David Carbon, head of
economic and currency research at DBS Group Holdings in Singapore,
wrote in a report yesterday. “Exports appear to have turned the corner.”
South Korea’s Samsung Electronics Co. said last week it expects global
demand for flat-panel televisions to rise more than 10 percent in the
second quarter.
To contact the reporter on this story: Kevin Cho in Seoul at
[email protected].