Confidence among South Korean manufacturers declined to its lowest level in more than three years amid fears that a worsening Eurozone situation may affect firms' export intentions in the coming month.
A survey report released by the Bank of Korea showed Monday that the business outlook index for the manufacturing sector fell to 70 in August, the lowest score since May 2009, from 81 in July. The manufacturing confidence index for July was at 71, falling sharply from 82 in June.
Business expectations of export-oriented companies declined markedly during the month with the corresponding index falling to 74 in August from 87 in the previous month. Businesses that depend more on domestic demand also have weaker expectation with the index falling to 68 from 78.
After seasonal adjustment, manufacturers' confidence index for July was at 68, down 10 points from June. The outlook index for August fell by 12 points to 69.
In the non-manufacturing sector, the sentiment index on business conditions for July declined by 8 points to 67. The outlook for the following month also fell, by 7 points to 69.
The economic sentiment index, a composite of the business sentiment index and the consumer survey index was 92 for July, down 4 points from June.
Earlier this month, the Bank of Korea slashed the gross domestic product forecast for 2012 to 3 percent from April's forecast of 3.5 percent. In 2013, growth is seen at 3.8 percent compared to 4.2 percent projected earlier.
The growth outlook for both private consumption and exports have been lowered as weak global economic prospects, mainly due to developments in Europe, dampened demand both domestically and globally.
This month, the central bank cut the key interest rate by 25 basis points to 3.00 percent to counter the impact of global gloom.
by RTT Staff Writer
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