Is Korean economy really getting better?

Multiple signs are surfacing that the Korean economy is on a path for recovery, but the question still remains: Is the economy really getting better so that the general public can feel the difference?

The Bank of Korea (BOK) announced Friday that consumer sentiment improved in October, for the first time in three months.

The composite consumer sentiment index for October stood at 109.2, up 1.5 points from the previous month, the BOK said, citing its survey of 2,020 households across the nation. A reading above 100 means optimists outnumber pessimists.

The index plummeted in August and September, as geopolitical tension in Northeast Asia rose amid North Korea’s intercontinental ballistic missile tests and its nuclear program.

The BOK attributed the rebound to eased tensions between North Korea and the United States after the Chuseok holiday in the first of week this month. The central bank also said people’s sentiment about the economy has improved in general.

A day earlier to the announcement, the central bank also said the country’s gross domestic product (GDP) grew 1.4 percent in the third quarter from three months earlier, giving more confidence to the BOK’s growth forecast of 3 percent for this year.

Moody’s also released a report strengthening the optimism about the Korean economy.

Senior Credit Officer Steffen Dyck said in a statement that the credit rating house expects Korea’s real GDP will grow 3 percent this year and 2.8 percent next year.

“Korea’s credit profile is supported by very high economic strength, given a diversified and competitive economy, with robust growth potential — around 3 percent over the next five years — and high income levels,” Dyck said.

Park Jin-hyuk of Korea Center for International Finance also expected domestic demand will continue to recover following improvements in employment and hikes in minimum wage. Also, the global economic recovery will help Korea’s exports to rebound.

Experts say an increase in general household income helps people have a positive economic sentiment, and people can feel the economic recovery when the improvements in macroeconomics indices are reflected into rebounds in household income.

Korea Investment and Securities economist Park Jeong-woo said a quick view on how the household generates income will help understanding why Korean households still have doubts about economic recovery.

“Gross domestic income (GDI), which leads to household income, is determined after reflecting the real trade balance to a country’s GDP,” Park said. “This means the trade balance plays a huge role in calculating the GDI and the trade balance is largely swayed by concurrent trade condition.”

According to Park, there has been a large gap between Korea’s GDP and GNI from 2011 to 2014, because the trade condition during the period got worse due to high imports prices stemming from continued oil price hike.