(Bloomberg) -- South Koreans are at their gloomiest in more than two and a half years as trade battles and an export slump cast clouds over the economic outlook.
The Bank of Korea’s monthly consumer sentiment index dropped to 92.5 in August from 95.9 the previous month, according to a statement Tuesday from the Bank of Korea. That puts the gauge at the lowest since January 2017, a month after the impeachment of then-President Park Geun-Hye.
The central bank cited Japan’s new export restrictions, the escalation of the U.S.-China trade dispute, the nation’s export slump and a decline in equity prices as among the reasons for households’ worsening sentiment.
The drop in confidence comes as South Korean policy makers sound increasingly downbeat about the economy. BOK Governor Lee Ju-yeol said last week the central bank’s 2.2% growth forecast would not be achievable if the slump in exports and investment persisted. The BOK board members meet Friday to review the policy interest rate, and the drop in sentiment would be weighed as they consider the need to cut again, and if so, when.
South Korea’s economy has been battered by the China-U.S. trade war, as rising uncertainties shrink demand worldwide and companies become wary of expanding investment. The country’s trade confrontation with Japan, which threatens to undermine South Korea’s tech production, is also showing little sign of abating.
The index was determined by surveying 2,381 households from Aug. 12 to Aug. 19 on their views about subjects including income, spending and the economic outlook. A reading below 100 means there are more pessimistic responses than optimistic ones.
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