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Korea's consumer sentiment drops sharply in December as political turmoil shakes economy

Published: 24 Dec. 2024, 14:47 Updated: 25 Dec. 2024, 13:35

A rent notice is attached to a store in Myeong-dong, central Seoul. [NEWS1]

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 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).

It logged the sharpest decline since March 2020, when the figure fell 18.3 percent.

A reading above 100 means optimists outnumber pessimists.

"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 stabilize 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 Korean economy to expand 1.9 percent next year, slowing from this year's 2.2 percent 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 percent for the year ahead, up from the previous month's 2.8 percent, the BOK said.

Updated, Dec. 25: Per a correction issued by the Bank of Korea, the largest previous fall changed to March 2020, during the Covid-19 pandemic.

Yonhap