Korea’s Consumer Confidence Falls to 5-Month Low on Europe

South Korean consumer confidence dropped to the lowest level in five months as officials cautioned that a protracted European debt crisis is hurting the growth outlook for Asia’s fourth-largest economy.

The sentiment index was at 100 in July, down from 101 in June, the Bank of Korea said in an e-mailed statement today. A reading of 100 indicates there are an equal number of optimists and pessimists.

Growth momentum is weak and the global outlook is worsening, the Finance Ministry said in a report to parliament yesterday. South Korea’s economy probably expanded 0.5 percent in the second quarter from the previous three months, when it grew 0.9 percent, according to 13 economists surveyed by Bloomberg News before data due tomorrow.

“We wake up every morning with more bad news about the economy,” said Yoon Yeo Sam, a fixed-income analyst at Daewoo Securities Co. in Seoul. “It’s hard to consume or invest when the future looks gloomy.”

South Korea’s won weakened 0.4 percent to 1,150.65 per dollar at 11:02 a.m. in Seoul, according to data compiled by Bloomberg. The Kospi Index fell 0.9 percent.

The Bank of Korea said in a separate report to parliament today that the momentum of the country’s economic recovery is weakening as export growth slows and consumers and businesses lose confidence. A protracted fiscal crisis in Europe and a possible slowdown in emerging countries are the main risks to economic growth, the BOK said.

The expected inflation rate over the next year was 3.6 percent in July, down from 3.7 percent last month, according to today’s e-mailed BOK statement. Consumer prices increased 2.2 percent in June from a year earlier, the slowest pace in 32 months.

The consumer confidence index is based on survey responses from 2,050 households in 56 cities. It was conducted by mail and telephone between July 11 and July 18.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE