"Will the Economy Revive?"... News Sentiment Index Hits Highest in 3 Years

Korea's News Sentiment Index Hits Highest in 3 Years 1 Month
Statistical Index of Economic Sentiment in Economic News Articles
Expectations for Semiconductor Export Improvement and Continued Current Account Surplus

On the 9th, the "Samsung Foundry Forum 2024" was held at COEX in Gangnam-gu, Seoul. The Foundry Forum is an event where Samsung Electronics shares the current status and future vision of foundry manufacturing technology with fabless customers and ecosystem members. Photo by Jinhyung Kang aymsdream@

Public expectations for economic improvement have reached their highest level in three years. This was influenced by optimism about the semiconductor industry recovery and the government's economic revitalization policies.

According to the Bank of Korea's Economic Statistics System on the 16th, the News Sentiment Index for the first week of July recorded 118.14, the highest in 3 years and 1 month since June 2021.

The Bank of Korea's News Sentiment Index is a statistic that quantifies economic sentiment appearing in economic news articles. Introduced to utilize various data sources such as big data, the index has a long-term average of 100 from 2005 to last year, and an index above 100 is interpreted as an improvement in economic sentiment among businesses or households compared to the past.

The News Sentiment Index has been steadily rising since the second half of last year. This trend is related to the improving economy centered on exports of Korea's key products such as semiconductors, automobiles, and ships.

This year, the notable improvement in semiconductor exports has increased expectations for economic recovery. Thanks to the improvement in semiconductor exports, not only did the current account surplus widen, but Korea's economic growth rate in the first quarter also greatly exceeded expectations, causing the News Sentiment Index to rise sharply.

In particular, the News Sentiment Index for the first week of July surged following Samsung Electronics' announcement of second-quarter earnings that exceeded expectations on the 5th. Samsung Electronics' preliminary operating profit for the second quarter was 10.4 trillion won, a surprise performance exceeding securities firms' estimates by 2 trillion won. LG Electronics, which announced its earnings on the same day, also contributed to the index rise by achieving its highest-ever second-quarter profit.

The government's policies aimed at economic improvement also had an impact. The News Sentiment Index rose as the government recently strengthened tax benefits to enhance corporate value (value-up) and introduced support measures for self-employed individuals facing difficulties.

A Bank of Korea official stated, "The July News Sentiment Index showed an upward trend as news of strong earnings announcements from major companies such as Samsung Electronics and LG Electronics, along with government support measures for businesses and the self-employed, came one after another."

However, there are still several challenges to be addressed, such as sluggish domestic demand, increasing household debt, and issues with real estate project financing (PF), so it may take time for the actual public perception of the economy to improve. The Bank of Korea's Consumer Sentiment Index, which reflects the flow of perceived economic conditions, was 100.9 last month, still at the long-term average level.

A Bank of Korea official explained, "There is a temporary aspect of the index rising due to Samsung Electronics' strong performance," adding, "The figure for the entire month of July may be somewhat lower."