• Bloomberg


South Koreans are at their gloomiest in more than 2½ years as trade battles and an export slump cast clouds over the economic outlook.

A monthly consumer sentiment index issued by the Bank of Korea dropped to 92.5 in August from 95.9 the previous month, according to a statement Tuesday from the bank. That puts the gauge at its lowest since January 2017, a month after the impeachment of then-President Park Geun-Hye.

The central bank cited Japan’s new export restrictions, escalation of the U.S.-China trade dispute, the nation’s export slump and a decline in equity prices as among the reasons for households’ worsening sentiment.

The drop in confidence comes as South Korean policymakers sound increasingly downbeat about the economy.

BOK Gov. Lee Ju-yeol said last week the central bank’s 2.2 percent growth forecast would not be achievable if the slump in exports and investment persisted.

The BOK’s board members are set to meet Friday to review the policy interest rate, which they cut in July. The drop in sentiment is likely to be weighed as they consider whether to cut again, and if so, when.

South Korea’s economy has been battered by the China-U.S. trade war as rising uncertainties shrink demand worldwide and companies become wary of expanding investment.

Its trade confrontation with Japan, which threatens to undermine South Korea’s technology production, is also showing little sign of abating.

The sentiment index was determined by surveying 2,381 households from Aug. 12 to Aug. 19 on their views about subjects including income, spending and the economic outlook. A reading below 100 means there are more pessimistic responses than optimistic ones.

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