If the consumer and corporations sentiment indexes continue to improve, forecasts suggest that Korea's economic growth rate may rise to around 1%.
The Hyundai Research Institute noted in a report released on the 20th, titled "Sentiment revives, domestic demand moves," that "if the sentiment index improves by the fourth quarter, the real gross domestic product (GDP) growth rate this year will be close to 1%" and added, "If positive factors for domestic recovery are combined, the growth rate could also reach the low 1% range."
The Hyundai Research Institute observed that the consumer sentiment index (CCSI) and the corporations sentiment index (CBSI) tend to generally move in line with private consumption and private investment indicators.
By utilizing this correlation, it was estimated that if the two sentiment indexes improve for two consecutive quarters in the second and third quarters, the year-on-year increase in private consumption could reach 2.2%. However, the year-on-year increase in private investment is expected to be -0.5%.
In the report, the Hyundai Research Institute suggested that, "For a rebound in the economic agents' sentiment to lead to a real economic recovery, it is necessary to maintain consumers' positive sentiment stably and to have policies that can reflect corporations' expectations" and noted that "the sentiment index should also be reviewed to better reflect the real economy."