After President Yoon Suk Yeol’s duties were suspended, South Koreans’ economic sentiment slightly recovered. However, experts say it will take time to fully recover from the sharp decline triggered by the recent state of emergency.
According to the Bank of Korea, the News Sentiment Index dropped to 77.47 on November 11, marking its lowest level over two years. This represents a significant decline from its peak of 92.97 on November 4, just after the declaration of martial law. The latest index level is the lowest since December 2, 2022, when it stood at 77.32.
Despite the recent downturn, the index saw a sharp rebound from 80.98 on November 13, before the National Assembly’s impeachment vote against Yoon, to 85.35 on November 16, after the motion passed.
The Bank of Korea developed the News Sentiment Index in January 2022. It is published every Tuesday as an experimental weekly statistic. The index quantifies economic sentiment based on news articles related to the economy.
The process involves extracting sample sentences from articles and then classifying each sentence’s sentiment as positive, negative, or neutral using machine learning. The index is calculated by measuring the difference between the number of positive and negative sentences. If the index exceeds 100, economic sentiment is more optimistic than the long-term average.
The monthly index rose from 98.84 in September to 100.61 in October, surpassing the 100-mark. It remained stable at 100.62 in November but dropped sharply to 82.32 this month.
While some decline was recovered following the impeachment motion, experts believe economic sentiment has not yet fully returned to pre-crisis levels.
Bank of Korea Governor Lee Chang Yong, speaking at an emergency inquiry session of the National Assembly’s Planning and Finance Committee, highlighted the significant drop in economic sentiment indicators. He stressed the importance of implementing economic policies effectively to restore public confidence.
The correlation between the News Sentiment Index and key economic indicators will be closely monitored in the coming months.
Typically, the News Sentiment Index leads the Consumer Confidence Index (CCSI) by about one month and the Business Survey Index (BSI) for manufacturing by approximately two months.