Confidence In South Korea Improves After The Government Interventions

Daily Forex Fundamentals | Written by ecPulse.com | Jul 27 09 07:11 GMT |

The South Korean economy started its fist steps toward recovery, since it started benefiting not only from the government interventions but also from the improvement in worldwide demand, increasing the chances that the economy might avoid seeing contraction, and this was good enough to ensure people and increase their confidence that reached to a seven years high. The sentiment index in South Korea rose to 109 in July from the 106 in June, as any reading over 100 points to optimism while any reading below it indicates pessimism; this reading marks the highest in almost seven years, as people felt more confident since their government adopted the right policies to help the economy cope with the most severe worldwide financial crisis since World War II. South Korea's economy grew by 2.3% during the second quarter of this year after avoiding in the first quarter as well to fall into contraction since it grew by 0.1%, and this expansion in the second three months of these years marks the best performance seen by the economy in almost six years. This improvement is attributed to several factors, from which the most important are the stimulus policies adopted by the government which spent 67 trillion won or 52 billion dollars to labor market aid and infrastructure spending while 17.2 trillion won were given to households in order to support spending. There is also the most aggressive easing in the monetary policy in 10 years, as the central bank cut the benchmark interest rate by 3.25% from October to February, this encouraged people to spend regardless the developments in the worldwide economy as sales in major department stores rose for the fourth consecutive month during June, and this was able to compensate for the decline in exports and the deterioration in worldwide trade. Since the second quarter global demand also started to pick up as China started to see real recovery while many major economies stopped deteriorating and stability is finding its place now, this was able to give a considerable support to consumers and investors confidence, to get reflected not only on sales but also on The Kospi stock index which climbed 34% this year. The only problem which the economy still faces in the weak job sector, as companies are still reluctant to start hiring since their income and profits didn't rise enough to determine them start spending, investing and increasing their working staff, therefore the unemployment levels remain elevated so the government should concentrate more on how to determine businesses to start hiring. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk