SEOUL, KOREA - Consumer sentiments that have shrunk to a minimum since the April 16 ferry incident are showing signs of slow recovery.

 

The Bank of Korea said on August 27 that the Composite Consumer Sentiment Index (CCSI) for the month of August was 107, up 2 points from July's 105. The CCSI measures the level of optimism that consumers have about the performance of the economy. A CCSI above 100 indicates an improving outlook and below 100 a deteriorating outlook. The CCSI is computed as a sum of six variables, including current living standards, prospective household income, and prospective spending. 

 

The index was maintained at the level of 108 during the months of February to April. But it fell to 105 in May after the ferry sinking tragedy, followed by 107 in June and 105 in July.

 

The main reason the index has recovered quickly has to do with the government's policy measures to stimulate the economy and the central bank's rate cut in August. Chung Mun-gap, Bank of Korea senior manager responsible for statistical investigation, said, "The announcement of new stimulus package by the newly appointed economic policy team and the recent rate cut by the monetary authorities have encouraged consumers to spend more and become more optimistic about the future." The survey was taken for eight days between August 13 and 20 on 2,200 households across the nation.