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Korea's business sentiment hits 4-year low due to political uncertainty and growth concerns

Published: 27 Dec. 2024, 11:45 Updated: 27 Dec. 2024, 14:00

Containers stacked at a port in Korea's southeastern city of Busan. [YONHAP]

Korea's business sentiment index fell to the lowest level in more than four years amid political uncertainties following President Yoon Suk Yeol's short-lived martial law declaration and concerns for growth momentum, a central bank poll showed Friday.

The Composite Business Sentiment Index, or CBSI, in all industries for December came to 87, down 4.5 points from the figure tallied for the previous month, according to the survey by the Bank of Korea.

It marked the lowest level since September 2020, when the index came to 83.

December's reading also logged the largest decline since January 2023, when the figure dropped 5.6 points from a month earlier.

The outlook for next month sank 7.3 points to 82.4, also the lowest level since August 2020.

The index measures corporate prospects for business conditions. A reading below 100 means pessimists outnumber optimists.

The CBSI among manufacturers fell 3.7 points from a month earlier to 86.9 in December, the lowest level since February 2023.

Manufacturers pointed to unfavorable business conditions and tight financial conditions as major reasons for their negative view.

The index for nonmanufacturers also lost 5.0 points to 87.1, the data showed.

The economic sentiment index, which reflects sentiment among both consumers and businesses, dropped 9.6 points to 83.1 for December, the data showed.

The worsening sentiment came after the opposition-led National Assembly voted to impeach Yoon earlier this month following Yoon's shocking imposition of martial law on Dec. 3.

The Constitutional Court has up to 180 days to determine whether to remove Yoon from office or restore his powers.

South Korea is also experiencing sagging domestic demand and weak export growth, and the economic growth for next year is forecast to come below the 2 percent level.

Yonhap