(Bloomberg) -- South Korea’s tech industry is now more pessimistic about consumer demand than it was during the pandemic, with the outlook for confidence seen slipping to its lowest level in seven years.

Data released Friday by the Bank of Korea show the outlook among electronics, display and communication-device businesses fell to 61 for February. If the actual business outcome matches the forecast, it would be the lowest reading since February 2016 when the business survey index hit 59.

The industry confidence gauge encompasses manufacturers of semiconductors, displays and smartphones, major drivers of Korea’s exports. Two of the country’s chipmaking giants, Samsung Electronics Co. and SK Hynix Inc., are the world’s leading suppliers of computer memory and especially vulnerable to the recent decline in consumers demand. 

The deterioration in sentiment across Korea’s tech sector suggests the current slump may be tougher than during the height the pandemic, with global interest rates still rising and inflationary pressure not abating.

Korea last quarter saw its first economic contraction in years as exports fell and consumption slowed. Waning demand for semiconductors is leading the decline and the government expects a chip exports recovery only beginning in the second half.

“We’re not out of the woods yet when it comes to electronics,” Frederic Neumann, chief Asia economist at HSBC Holdings Plc, told Bloomberg TV on Thursday. “A recession is a risk here.”

--With assistance from David Ingles.

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