Seoul: South Korea's consumer sentiment saw a significant increase in May, marking the largest rise in over four years, driven by reduced political uncertainty and hopeful prospects for a tariff agreement with the United States, as reported by the central bank on Tuesday. The composite consumer sentiment index climbed to 101.8 this month, an 8-point increase from April, based on a survey conducted by the Bank of Korea (BOK).
According to Yonhap News Agency, this is the highest index level since October, when it also stood at 101.8. The index had previously declined, reaching a low of 88.2 in December following the imposition of martial law by former President Yoon Suk Yeol. The current rise in sentiment marks the sharpest gain since October 2020, when it jumped by 12.3 points from the previous month.
Yoon's impeachment in late December and his formal removal from office last month have paved the way for the upcoming presidential election, scheduled for next Tuesday. The consumer sentiment index indicates that when the reading is above 100, optimists outnumber pessimists.
The improvement in sentiment is also attributed to ongoing negotiations with the U.S. regarding the Trump administration's tariff policies. In April, the U.S. initiated reciprocal tariffs on trade partners, including a 25 percent duty on South Korean imports, but paused these measures to allow for bilateral discussions. Both nations are now working towards a "July package" deal, aiming to finalize an agreement before July 8, the expiration date for Trump's 90-day tariff suspension.
BOK official Lee Hye-young noted at a press briefing that negative factors affecting consumer sentiment have recently subsided, and the improvement is partly due to a base effect, as the index had been low for some time. Lee also mentioned that the positive sentiment reflects expectations for future economic conditions, but the continuation of this optimistic outlook remains uncertain.