Seoul: South Korea’s consumer sentiment fell by the largest margin since the Covid-19 pandemic in December as political turmoil sparked by President Yoon Suk Yeol’s shocking martial law declaration added another layer of uncertainty to the economy, a central bank poll showed on Tuesday.
The composite consumer sentiment index stood at 88.4 this month, down 12.3 points from the previous month’s 100.7, according to the survey conducted by the Bank of Korea (BOK).
December’s figure is the lowest level since November 2022 when the index came to 86.6. It also logged the sharpest decline since March 2020, when the index fell by 18.3 points. A reading above 100 means optimists outnumber pessimists, reports Yonhap news agency.
“It was the third consecutive monthly fall. The martial law incident appeared to have affected the sentiment, which had already worsened after the U.S. presidential election and growth concerns,” a BOK official said.
Political chaos has dented the economy and the market following Yoon’s imposition of martial law on Dec. 3 and the subsequent vote by the National Assembly to impeach him.
The stock market had tumbled to a yearly low earlier this month, and the Korean currency dipped to the lowest level in more than 15 years and has stayed around the 1,450 won level against the U.S. dollar.
In an effort to stabilise the markets, financial authorities have vowed to inject “unlimited liquidity” and implement all options available.
The martial law debacle came at a time when the country is projected to log slower economic growth in 2025 than this year on weak exports and sagging domestic demand.
The BOK expected the South Korean economy to expand 1.9 per cent next year, slowing from this year’s 2.2 per cent expansion in 2024.
Adding to woes is U.S. policy changes under the new Donald Trump administration, as the president-elect has vowed to impose high tariffs on imported goods and to implement a series of protectionist measures.
Ordinary people expected consumer prices to rise 2.9 per cent for the year ahead, up from the previous month’s 2.8 per cent, the BOK said.
—IANS