Macquarie Equities Research said in its report that South Korea might enter a structural consumption slowdown following four years of robust growth after it read the released govenrment consumtpion confidence data.
“Among various concerns about Korea‘s consumption, we are wary of the housing market the most. A structural change in Korea’s housing system -- such as weakening demand for house ownership -- currently is likely to be a painful procedure for Korean consumers, whether or not they own houses,” said Na Hong-suk, an analyst at Macquarie.
As consumers start to understand they will no longer make profits on property for residence or investment, the fear of an unprecedented property market correction could subsequently dent consumer sentiment. Retail sales, outbound travel demand and even cosmetics sales have been affected by weak consumer sentiment.
Due to persistent euro zone uncertainties and a slowdown in domestic production and spending, South Korea’s consumer confidence fell from the previous month. The consumer sentiment index (CSI) stood at 101 for this month, compared with 105 in May, according to the central Bank of Korea (BOK).
A reading above the benchmark 100 means optimists outnumber pessimists. The survey, based on a poll of 2,072 households in 56 cities nationwide, was conducted from June 12-19.
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