The Bank of Korea, which advocates data-driven currency policy, is focusing on securing new data to complement the limitations of existing economic indicators. In particular, it is exploring ways to analyze consumption and employment-related statistics with precision. This is seen as part of efforts to secure more reliable economic indicators amid growing concerns about economic slowdown.
◇ Reviewing the acquisition of simple payment data… "Possible to secure the latest consumption trends"
According to a report by ChosunBiz on the 4th, the Bank of Korea is seeking to acquire simple payment data to understand consumption trends. The need was raised mainly among some Monetary Policy Committee commissioners, and accordingly, the bank's Research Institute and Payment Division are discussing specific implementation plans. A Bank of Korea official noted, "We are in the early stages of discussing ways to acquire simple payment data."
The Bank of Korea is paying attention to simple payment data because consumers' payment methods are changing. According to the 'Current Status of Electronic Payment Service Utilization in the First Half of 2024' announced by the bank in September last year, the average daily amount of simple payment service utilization in the first half of last year was 939.2 billion won, an 11% increase compared to the previous year. The daily average utilization amount reached 1.15 trillion won, marking the highest record ever.
However, existing economic indicators have the limitation of not quickly reflecting simple payment statistics. For example, one of the economic indicators related to industrial activity, the 'Retail Sales Index,' is compiled by investigating the sales amounts of various retail sectors, including department stores, large discount stores, duty-free shops, supermarkets, specialized retailers, and online payments, but is announced two months later than the survey date.
It is also difficult for the Bank of Korea to fully reflect simple payment statistics in the card spending data it uses for consumption indicators. While card-based simple payments are included, points charged using cash-like methods such as account transfers or non-account deposits, as seen with Naver Pay or Kakao Pay, are excluded from card spending amounts.
Jo Yong-gu, a researcher at Shinyoung Securities, said, "If we can view simple payment data, there would be an advantage of quickly confirming the latest consumption trends along with card spending," adding, "This could potentially secure domestic data that influences interest rate decisions."
◇ Seeking improvements in employment statistics… "We will find indicators reflecting the economy"
The Bank of Korea has also begun to devise alternatives to overcome the limitations of existing employment statistics. Currently, the employment trends released monthly by the Statistical Office are based on the economic activity population survey. However, this survey is conducted through a questionnaire method targeting households, which can result in discrepancies with actual changes in corporate employment. This has raised concerns that it is difficult to reflect the actual labor market situation when establishing currency policy.
A Bank of Korea official explained, "There are aspects of our country's labor market that are disconnected from economic fluctuations," adding, "We are developing new employment statistics to find indicators that can accurately reflect economic fluctuations by eliminating trend-based or structural factors."
The active pursuit of acquiring new data by the Bank of Korea is rooted in the data-dependent currency policy stance of Governor Lee Chang-yong. In his New Year's speech this year, he mentioned that "future currency policy will determine the timing of interest rate cuts by closely examining the developments of internal and external risk factors and changes in economic flow based on the data obtained," emphasizing the importance of economic indicators.
Major central banks, including the U.S. Federal Reserve (Fed), have strengthened data-driven currency policies. Jerome Powell, the chair of the U.S. Federal Reserve, is minimizing signals regarding future interest rate paths and emphasizing the importance of employment and inflation data. In South Korea, as uncertainties in the domestic economy increase, the belief is spreading that it is essential to secure new data, as relying solely on existing statistics may not enhance the reliability of policy decisions.
Kong Dong-rak, an economist at DAISHIN SECURITIES, evaluated, "The Bank of Korea's move to recognize the limitations of existing economic indicators and develop new statistics is positive," but added, "However, there will likely be challenges in resolving legal issues and collaboration with corporations during the data acquisition process."