S. Korea's economic sentiment weakens amid domestic political uncertainty

KDI, 2년만에 "경기 하방위험 증대"… 정치로 심리악화 우려

A state-run think tank has shed concerning light on the broader impact of Korea's political unrest on its economic sentiment among households and businesses alike.
Our Choi Min-jung explains.

The South Korean economy is experiencing mounting downward pressure, amid domestic political uncertainty.
The Korea Development Institute said in a report Wednesday, that South Korea's economic sentiments have dropped significantly, due to the recent political unrest following President Yoon Suk Yeol's short-lived martial law declaration on December third.
Household and corporate sentiment indices have fallen further than during President Park Geun-hye's impeachment in 2016.

The Composite Consumer Sentiment Index declined by 9-point-4 points over three months in 2016, whereas it dropped by 12-point-3 points in just one month during the recent turmoil.

The recent Business Survey Index also fell comparatively sharper than during Park's impeachment.

As figures suggest, an expert says the current situation is much more uncertain than it was during the Park Geun-hye impeachment proceedings.

" currently many of the problems that Korea is facing concerning the impeachment is outside the Constitution or somewhere where it's not really very well defined by the Constitution. So in some sense, we are in a very uncertain ground that has basically increased not only political but economic uncertainty."

The KDI also noted that economic recovery is being delayed by slowing production growth.
The construction sector has continued to struggle with weak performance, while industrial production in mining and manufacturing receded in recent months, despite high growth in semiconductors, due to declines in automobile production.
Despite the recent political turmoil, however,. financial market indicators, such as exchange rates and stock prices, have remained relatively stable.
Experts also expect some recovery in economic sentiment, but believe it'll be harder the longer the current political turmoil lasts.
Choi Min-jung, Arirang News.

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2025-01-08, 17:00 (KST)