South Korean consumer confidence held at a 7-month low even after the government and central bank moved to stimulate domestic demand with more spending and lower borrowing costs.
The sentiment index was at 99 in September, unchanged from August, the Bank of Korea said in an e-mailed statement today. A reading below 100 indicates pessimists outnumber optimists.
The European debt crisis and a global slowdown have crimped demand for South Korea’s exports, weakening an economic recovery. The Bank of Korea may follow its surprise rate cut in July with further easing in October, said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore.
“It is quite unlikely that the July cut on its own is sufficient,” Leong said before the data were released. “The picture of a sustainable rebound will not be apparent to policy makers until November.”
The International Monetary Fund reduced its growth estimate for the nation to 3 percent this year on Sept. 21.
The Bank of Korea cut its benchmark interest rate to 3 percent in July, then paused for the next two months. The finance ministry announced 5.9 trillion won ($5.3 billion) of spending and tax relief this month, adding to 8.5 trillion won of support measures in June.
The expected inflation rate over the next year was 3.4 percent, the slowest since December 2010, the bank said. Consumer inflation moderated to a 12-year low of 1.2 percent in August.
The consumer confidence index is based on survey responses from 1,984 households in 56 cities. It was conducted by mail and telephone between Sept. 11 and Sept. 18.