South Korea’s Composite Consumer Sentiment Index (CCSI) rose by 0.6 points to 111.4 in August, improving for a fifth straight month. Among the six sub-indices, improvements were seen in current living standards and domestic economic conditions, while the outlook for domestic economic conditions declined for a second month. The remaining three outlook components — living standards, household income, and spending — were unchanged.
The data showed that recent fiscal stimulus contributed to improved consumer sentiment and growth momentum. However, these effects may prove to be temporary. The second round of cash handouts – this time income-based – is scheduled for next month. But once these stimulus package funds dry up, there will be a sharp decline in spending, leading to a sudden drop in overall expenditures. We expect GDP to rise quite meaningfully in the second half of 2025, but then lose steam next year.