'COVID-19 Impact' February Consumer Sentiment Plummets... Third Largest Drop Ever

The Third Largest Decline Following the Financial Crisis and the Great East Japan Earthquake
Consumer Sentiment Drop Matches That During the MERS Outbreak

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Consumer sentiment sharply declined in February due to the impact of the novel coronavirus infection (COVID-19). The decline was the third largest since the statistics began to be compiled.

According to the 'February 2020 Consumer Sentiment Survey' released by the Bank of Korea on the 25th, the Consumer Confidence Index (CCSI) for this month fell 7.3 points from the previous month to 96.9. This is the lowest level in six months since August last year (92.4). If this index is above 100, it means that consumers' sentiment is more optimistic than the long-term average (2003?2019). The CCSI fell below 100 for the first time in four months since last October.

The decline in the CCSI was the third largest since the Bank of Korea began compiling the statistics in July 2008. It was smaller than during the financial crisis in October 2008 (-12.7 points) and the Great East Japan Earthquake in March 2011 (-11.1 points). However, it showed a similar decline to June 2015 (-7.3 points), when Middle East Respiratory Syndrome (MERS) spread.

Looking at the detailed components that make up the overall index, the Current Economic Situation Consumer Sentiment Index (CSI), which is closely related to the economic situation, recorded 66, down 12 points from the previous month (78). The Future Economic Outlook CSI fell 11 points from 87 to 76. The Employment Opportunity Outlook CSI dropped 7 points from 88 to 81 as economic perception worsened.

The Current Living Conditions CSI (91), which reflects consumers' wallet conditions, fell 2 points, while the Living Conditions Outlook CSI (93), Household Income Outlook CSI (97), and Consumption Expenditure Outlook CSI (106) each declined by 4 points.

Due to the continued impact of the government's 'Housing Market Stabilization Measures,' the Housing Price Outlook CSI (112) fell by 4 points. The Wage Level Outlook CSI (116) decreased by 3 points compared to the previous month.

Price perception remained at 1.8%, the same as the previous month, but the expected inflation rate fell again to a record low of 1.7%. Kwon Cheo-yoon, head of the Statistical Survey Team at the Bank of Korea's Economic Statistics Bureau, explained, "Recently, as consumer prices rebounded, the expected inflation rate also showed signs of rebounding last month, but it is interpreted that the expected inflation rate fell due to the (negative) impact on economic perception, even though consumer prices have not yet been released."

Based on the February survey results alone, the shock to consumer sentiment caused by the spread of COVID-19 appears to be similar to that during the MERS outbreak. However, since the February Consumer Sentiment Survey was conducted from the 10th to the 17th of this month, it may not fully reflect all the negative factors caused by COVID-19. Team leader Kwon said, "Considering the survey period, the February Consumer Sentiment Survey reflects figures just before COVID-19 became serious domestically," adding, "In fact, the domestic impact of COVID-19 is somewhat less reflected."

This content was produced with the assistance of AI translation services.