Mideast Tensions Weigh on South Korea's Consumer Confidence

(MENAFN) Seoul's Ministry of Economy and Finance has sounded the alarm over mounting threats to South Korea's economic outlook, warning in its latest official assessment that intensifying geopolitical turbulence in the Middle East is casting a growing shadow over the country's near-term prospects.

The cautionary assessment was outlined in the ministry's monthly Green Book report, released Friday, which identified heightened geopolitical risks emanating from the Middle East conflict as a key driver of increased downside pressure on the Asian economy.

Despite resilient export performance — anchored by surging semiconductor shipments — and a gradual recovery in domestic demand, the ministry flagged that ongoing Middle East tensions were eroding both consumer and business confidence. Spiking oil prices compounded the concern, stoking inflationary pressures and squeezing household purchasing power.

On the global front, the Ministry cautioned that uncertainty continued to cloud international financial markets and energy prices, with trade flows and broader growth momentum threatened by the dual headwinds of the Middle East conflict and tightening trade conditions, including fresh tariff measures imposed by major economies.

The report's warnings came against a backdrop of otherwise mixed economic signals. Exports surged by double digits in March, reaching an all-time high on the back of robust chip demand — yet both consumer and business sentiment indices retreated during the same period. Facility investment posted a double-digit monthly gain in February, while retail sales held flat.

Inflation edged higher, with consumer prices rising 2.2 percent year-on-year in March, accelerating from February's 2.0 percent increase. On the labour front, job creation moderated slightly, with 206,000 positions added in March compared to a year earlier, down from the 234,000 gain recorded the prior month.

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