South Korean manufacturers' business confidence for July plunged to the lowest level in almost three years, a poll showed Tuesday, as the outbreak of MERS in Asia's fourth-largest economy is feared to further worsen already feeble domestic demand.
  

The business sentiment index, which measures the outlook of manufacturers on their business conditions for the coming month, reached 67 for July, down from a forecast of 76 for June, according to the Bank of Korea. It marks the lowest level since 67 in December 2012.
  

The reading for June also turned out to be much lower than the forecast, coming in at 66, also the lowest level since 56 logged in March 2009.
  

A reading below the benchmark 100 means that pessimists outnumber optimists. The index has been hovering below the threshold since July 2010, when it hit 100.
  

The sharp fall came as both exporters and domestic-focused companies, as well as large and small firms, turned more negative on their business prospects amid concerns that the outbreak of the acute respiratory illness is taking a toll on the economy as a whole.
  

The index measuring exporters' sentiment dropped by nine points to 67, while that for domestic-focused firms fell by eight points to 68. The figure for large firms tumbled to 72 from 80, while that for smaller companies sank to 60 from 69.
  

The polled manufacturers picked sluggish domestic demand as their biggest concern, with the percentage of responses rising to 25.8 percent from 22.2 percent. Economic uncertainties came next at 19.7 percent.
  

The monthly data comes amid concerns that Asia's fourth-largest economy may not rebound as much as anticipated as it is grappling to recover from the MERS fallout. The disease has claimed 32 lives here so far.
  

Its impact on the economy has been felt throughout the service and retail sectors as people avoided visits to public venues and foreigners called off travel plans on fears of contracting the virus.
  

Separate BOK data released earlier this month also showed a fall in consumer sentiment, with the index dropping below the benchmark 100 level for the first time in over two years.
  

Seoul has cut its growth outlook on the Korean economy as MERS woes continued to weigh down on the local economy since the first case in the country was reported on May 20. Last week, the finance ministry slashed its forecast for the year to 3.1 percent from 3.8 percent.
  

Other think tanks have suggested a more downbeat course, with the Korea Economic Research Institute lowering its forecast to 2.7 percent from 3.4 percent and the Korea Institute of Finance slashing it to 2.8 percent from 3.7 percent. (Yonhap)