User Confidence Ranks 2nd to Bottom in Asia
By Kim Jae-kyoung
Staff Reporter
Consumer confidence in Korea has reached rock bottom and ranked the second to last among Asian countries, as rising inflation and a deepening economic downturn have combined to dampen consumer sentiment.
In its latest consumer confidence index report, Master Card said Friday that the index for Koreans had plunged to 27.7 ― almost equivalent to the 26.1 during the 1998 financial crisis ― meaning they are becoming as pessimistic as they were during that time.
The figure is down 36.4 points from 64.1 six months ago, marking the biggest drop among Asian countries. The index was also significantly lower than 48.5 a year ago and its historical average of 51.7.
The index measures consumer confidence on prevailing expectations in the market for the next six months. It is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as the most optimistic and 50 as neutral.
Korea ranked second to last in the confidence index among 13 Asian countries surveyed, only ahead of Thailand whose index stood at 23.7. Consumers in Japan (29), Indonesia (36.7) and Malaysia (36.9) were also low in confidence.
``While financial institutions in Asia/Pacific have been less affected by the implosion of structured finance, a rising regional challenge is accelerating inflation, which is much higher than that of the U.S. and Europe," Yuwa Hedrick-Wong, economic advisor to MasterCard Worldwide in the Asia/Pacific, said.
``There are serious headwinds in the medium term with respect to consumer confidence in the region,'' he added.
A key culprit behind poor expectations in Korea is the fact that the economy is growing at a snail's pace amid soaring inflation.
The country is expected to see its economic performance fall to one of the worst among nine major Asian countries this year, according to the latest forecast by global investment banks.
The average growth forecast for the economy by the banks stood at 4.5 percent in May, down 0.1 percent from a month ago, only ahead of Taiwan (4.2 percent). The 2009 forecast for the economy averaged 4.8 percent, the lowest among the nine and well below the average rate of 6 percent.