Will the Economy Really Recover... Optimism Hits Highest Level in 2 Years

Bank of Korea News Sentiment Index Hits Highest in 2 Years 2 Months
Clear Improvement in Economic Sentiment Due to Export Recovery and Slowing Inflation Rate

The public's economic improvement expectations have reached their highest level in 2 years and 2 months. This is attributed to the recent improvement in export conditions centered on semiconductors, as well as the slowdown in this year's inflation rate compared to last year, which has raised expectations for a base interest rate cut.

According to the Bank of Korea's Economic Statistics System on the 29th, the news sentiment index for this month recorded 106.47. This is the highest since the 111.83 recorded in December 2021.

The Bank of Korea's news sentiment index is a statistic that quantifies economic sentiment appearing in economic news articles. It is an experimental statistic introduced to utilize various data sources such as big data, and when the index exceeds 100, it means that the economic sentiment of companies or households has improved compared to the past.

The news sentiment index has been steadily rising since the second half of last year. It is analyzed to be related to the situation where the Korean economy has been showing signs of improvement centered on exports since the end of last year.

According to the Korea Customs Service and others, the average monthly export amount of South Korea in the fourth quarter of last year was 56.2 billion dollars, an increase of 5.9% compared to the same period last year. Exports, which had been declining from the first to the third quarter of last year, turned to an upward trend in the fourth quarter. This is analyzed to be due to the improvement in Korea's major export items such as semiconductors and automobiles.

In particular, semiconductor exports in the fourth quarter increased by 10.4% compared to the same period last year, greatly improving the situation. This was thanks to the rise in product prices due to the production cut effect of memory semiconductors and the significant demand for artificial intelligence (AI) semiconductors. Semiconductor exports have continued to improve this year and are expected to lead Korea's economic improvement this year.

The recent slowdown in consumer prices, which had sharply risen until last year, is also positive. According to Statistics Korea, the consumer price index (CPI) of South Korea last month rose by 2.8% compared to the same month last year, falling to the 2% range for the first time in 6 months. The decline in the consumer price inflation rate has raised expectations for a base interest rate cut by the central bank and is analyzed to have influenced the rise in the economic sentiment index.

The Bank of Korea's recently announced February Consumer Sentiment Index (CCSI) was 101.9, exceeding the baseline of 100 for two consecutive months. The consumer sentiment index comprehensively shows consumers' sentiment about the economic situation. The current economic judgment Consumer Sentiment Index (CSI) also recovered to the 70 level in February, six months after recording 72 in August last year. A Bank of Korea official explained, "The slowdown in inflation continues, and exports are improving, leading to an improvement in the consumer sentiment index."