(Bloomberg) — South Korean business confidence deteriorated the most since the global Covid-19 outbreak, reflecting growing concerns about an economy grappling with political unrest and facing tariff threats from Donald Trump.
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The business outlook for January fell 7.3 points to 82.4 in the Bank of Korea’s composite sentiment index, marking the biggest monthly decline since April 2020, data showed Friday. The survey of nearly 3,300 businesses was conducted between Dec. 11 and Dec. 18 and follows a separate consumer confidence index that saw its biggest decline since March 2020 this month.
The two surveys illustrate the economic fallout after President Yoon Suk Yeol briefly declared martial law on Dec. 3, plunging the country into crisis, causing the won to plummet against the dollar and shaking investor confidence. Yoon is now awaiting a ruling from the Constitutional Court on an impeachment motion passed against him by the opposition-led parliament on December 14.
South Korea was already facing economic challenges before the martial law debacle, with export momentum beginning to falter due to weaker demand for semiconductors and concerns over Donald Trump’s return to the White House and its protectionist policies.
The central bank said on Wednesday it would further cut its benchmark interest rate next year, after making back-to-back cuts at the end of 2024 as part of a policy shift. Economists are increasingly speculating that the BOK may accelerate its easing cycle as the economy slows faster than expected.
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