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S Koreans doubtful as Govt trumpets broad recovery
While S Korea's Govt is pointing to signs of recovery in long-depressed private consumption, consumers themselves are not so sure.
While South Korea's Government is pointing to signs of a recovery in long-depressed private consumption, the consumers themselves are not so sure.
"It's good news and I absolutely would like to believe it's true, but I have yet to find more customers," said Park Ssang-yong, who sells cars for a living.
Some people think the Government is merely trying to talk consumers into spending. Others reckon the politicians want to talk about a return to good times because they will face parliamentary by-elections in April.
Finance Minister Lee Hun-jai, who had demanded further cuts in interest rates to promote consumption as recently as early January, surprised the country on Friday when he said the consumption might be recovering on a broad base.
If so, Park is not feeling it yet.
"Domestic auto sales remain sluggish and I would just like to wait a few more months to see if the recovery talks prove right," he said in an interview.
Lee Byoung-woo, a salesman at a Seoul-based securities house, said he could not feel assured of a recovery when people in his industry were still losing work.
"We are seeing several securites companies still cutting jobs, despite the stock market's recent rises, and some others are even planning more cuts," he said.
South Korea's gross domestic product grew only modestly at a seasonally adjusted 0.6 to 0.7 per cent per quarter in the first nine months of 2004. Private consumption has been stagnant for two years.
When one Internet site, empas.com, asked people this month whether they thought the recovery had begun, 72 per cent said "no".
"By-elections are now just two months away and the economy remains a mess, so I understand why the Government is doing that," said a respondent called young65k (http://ranking.empas.com).
A poll by another Web site, pollever.com, found 40 per cent of respondents strongly disagreeing with the suggestion that a broadening recovery in consumption was under way, while 15 per cent said only a few economic indicators showed improvement.
Such polls can be biased, because organisers do not choose the respondents; they choose themselves. But more scientific surveys of consumer spending are also fairly gloomy.
The January reading of a key consumer confidence index showed most people expecting the economy to worsen over the coming six months, even though the index's level had risen for the first time in four months.
Still, the rise was one of the encouraging factors that Minister Lee pointed to, along with increasing credit card usage, bullish department store sales and falling household debt.
Private consumption accounts for more than half of South Korea's economy, Asia's third largest.
The Bank of Korea, the central bank, has been trimming interest rates since 2003 to support economic growth. The latest cut, in November 2004, took the overnight call rate target to a record low of 3.25 per cent.
