South Korea consumer confidence dips to 10-month low on Iran risks
The pullback underscores how quickly external shocks can dent sentiment in an economy that had recently shown resilience
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[SEOUL] South Korea’s consumer confidence fell in March to the lowest in 10 months as the war in Iran darkened the outlook for growth and prices, tempering optimism from the elevated levels seen earlier this year.
The composite consumer sentiment index dropped to 107 in March from 112.1 in February, according to data released on Wednesday (Mar 25) by the Bank of Korea (BOK). The reading, while still above the neutral threshold of 100, marked the weakest level since May 2025. The gauge touched an eight-year high in November.
The decline comes as escalating tensions in the Middle East stoke concerns over higher energy costs, supply disruptions and broader financial-market volatility, risks that disproportionately affect South Korea given its heavy reliance on imported energy.
A key driver of the drop was a sharp deterioration in expectations for the economic outlook. The forward-looking index fell 13 points to 89, the lowest since April last year, reflecting growing worries about inflation and a slowing economy tied to higher oil prices and supply chain uncertainty.
Housing sentiment also weakened further. The index tracking home-price expectations slid 12 points to 96, the lowest level since March 2024, as higher borrowing costs and an anticipated increase in property listings following the scheduled end of tax relief for multi-homeowners weighed on the outlook.
The pullback underscores how quickly external shocks can dent sentiment in an economy that had recently shown resilience, supported by strong semiconductor exports and buoyant equity markets.
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Even so, with the headline index remaining above 100, the data suggest consumer sentiment has yet to turn outright pessimistic, leaving room for policymakers to monitor incoming risks rather than respond immediately.
The data adds to mounting headwinds for the BOK, which is set to get a new chief next month. The bank held its benchmark rate at 2.5 per cent, balancing still-fragile domestic demand against rising inflation risks from energy prices and currency volatility. Its next policy decision is due Apr 10. BLOOMBERG
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