Consumer sentiment and business due diligence index, interested in the impact of ‘With Corona’
▲Lee Joo-yeol, governor of the Bank of Korea.
This week (November 22-26), attention is focused on the announcement of the Bank of Korea, such as the decision of the base rate, the revised outlook for economic growth rate, and the latest indicators of consumer and business sentiment.
On the 23rd (Tuesday) and 24th (Wednesday), the BOK will release the results of November consumer trends, business due diligence index (BSI) and economic sentiment index (ESI) one after another. The Consumer Confidence Index (CCSI) in October was 106.8, up 3 points from the previous month. This index declined for two consecutive months in July (103.2) and August (102.5), and then rebounded from September (103.8). The industry performance BSI of all industries in October was 86, up 2 points from September (84). The index, which had reversed its decline in the previous month, has returned to an uptrend. The October ESI, which also reflected the Consumer Trend Index (CSI) in the BSI, was calculated to be 105.6, 1.0 point higher than in September. As the fourth wave of Corona 19 has calmed down and the vaccination rate has increased, the economy has revived somewhat.
The Monetary Policy Committee of the BOK will hold a meeting on the direction of monetary policy on the 25th (Thursday) to discuss whether to raise the base rate, which is currently 0.75%. Earlier, at a meeting of the Monetary Policy Committee on August 26, the key interest rate, which was at an all-time low of 0.5%, was raised by 0.25 percentage points for the first time in 15 months along with the COVID-19 crisis. In a state audit on the 15th of last month, Bank of Korea Governor Lee Ju-yeol said, “I expect that there will be no major difficulties even if the base rate is raised in November.” Since then, there has been no significant change in the economic situation, and concerns over inflation and household debt, which have an impact on interest rate hikes, have grown. In the market, the base rate hike in November has become an established fact. However, there is a possibility of a freeze as there are many opinions that we should be cautious about raising the base rate in consideration of the economic downturn risks such as the economic growth rate that fell to 0.3% in the third quarter of this year (compared to the previous quarter).
On the same day, the BOK also announces revised economic forecasts. It is noteworthy how much the BOK’s existing forecasts will be adjusted this year, including real gross domestic product (GDP) growth (4.0%) and consumer price inflation (2.1%). The Korea Development Institute (KDI), a national research institute, raised its growth forecast for the second half of 2021 to 4.0%, up 0.2 percentage points from May, and raised the consumer price index by 0.6 percentage points to 1.7% in the ‘Economic Outlook for the Second Half of 2021’ announced on the 11th.
In addition, the National Statistical Office will announce the September population trend on the 24th. As of August, the number of births broke an all-time low for the same month. With more deaths than births, the population decline has continued for the 22nd month. From January to August this year, the population decreased by 22,000 people.
Arrangement = Reporter Hong Seok-dong
