South Korean consumers' confidence rebounded in May from the previous month as the government's extra budget and the central bank's rate cut raised optimism about the economic recovery, the Bank of Korea (BOK) said Monday.
The consumer sentiment index (CSI) -- a gauge of consumers' overall economic outlook, living conditions and future spending -- came in at 104 for May, up from 102 tallied for the previous month, according to a monthly survey by the BOK.
The index stayed above the benchmark 100 for the fifth straight month in May, indicating that the number of optimists outnumbered that of pessimists. The survey, based on a poll of 1,988 households nationwide, was conducted from May 10-20.
"The government's supplementary budget and the BOK's rate cut seemed to help raise consumers' hopes for the economic recovery," said an official at the BOK. "Compared with April, North Korea's war threats also eased, helping to sooth consumer sentiment last month."
In early May, the parliament approved the government's proposed bill on an extra budget worth 17.3 trillion won ($15.4 billion) and the BOK slashed the key interest rate for the first time in seven months in May to support the government's drive to stimulate the economy.
Economic uncertainty still persists, however, due to U.S. fiscal constraints and a weaker yen, analysts say.
The yen's slide is threatening to hurt Seoul's exports as it gives Japanese exporters an upper hand with pricing in overseas markets.
The sub-index measuring the economic outlook came in at 97 for May, up from 88 tallied in April, underpinning the optimism growing over the economic stimulus measures. The indicator gauging the interest rate forecast reached 84 for May, compared with 85 in April, the BOK said.
The growth of the Korean economy quickened to 0.9 percent in the first quarter from three months earlier on gains in exports and fiscal spending.
The BOK's 2013 growth outlook was lowered to 2.6 percent from
2.8 percent and the government expects Asia's fourth-largest economy to grow 2.3 percent this year. (Yonhap News)
