South Korea’s Consumer Confidence Climbs to Seven-Year High

By Seyoon Kim

Aug. 26 (Bloomberg) -- South Korea’s consumer confidence climbed to the highest level in almost seven years in August as government spending and record-low interest rates helped drive the nation’s economic recovery.

The sentiment index rose to 114 from 109 in July, the Bank of Korea said in Seoul today. The figure is the highest since the third quarter of 2002, when the bank began publishing its confidence survey on a quarterly basis. An index figure of more than 100 indicates optimists outnumber pessimists.

South Korea’s economy expanded 2.3 percent in the second quarter, the fastest pace in almost six years as exports and household spending increased. In an effort to cushion the economy from the global recession, the government allocated extra funds and also frontloaded spending this year.

The central bank pared the benchmark interest rate by 3.25 percentage points between October and February, the most aggressive easing in a decade. The Kospi stock index has surged 42 percent this year.

Sales at the nation’s major department stores rose for a fifth month while factory production rose at the fastest pace in four months in June.

The consumer confidence index was based on a survey of 2,200 households in 56 major cities, conducted by mail and telephone between Aug. 12 and 19.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net