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Key Points

South Korean companies are feeling pessimistic for the 43rd month in a row. The prolonged slump is largely due to external uncertainties like US tariff hikes. While export-focused sectors like semiconductors and automobiles are doing well, domestic industries like petrochemicals and construction are struggling. An expert warns that weak investment sentiment could become a major drag on the country's economic growth.

Key Points: South Korea Business Sentiment Pessimistic 43 Months on US Tariffs

  • Business sentiment index for top 600 firms remains below 100 for 43rd month
  • Electronics and auto sectors show optimism with scores above 100
  • Petrochemical and construction industries post deeply pessimistic readings
  • Central bank survey shows a slight overall improvement to a 10-month high
2 min read

Business sentiment in S. Korea pessimistic for 43rd month on tariff woes

South Korea's business outlook remains negative for a 43rd straight month as US tariffs and a petrochemical slump weigh on sentiment, an FKI poll shows.

"Amid the challenging business environment, the contraction in the investment sentiment may become a significant burden on economic growth - Lee Sang-ho, FKI"

Seoul, Sep 26

South Korea's business sentiment remains pessimistic for October amid prolonged external uncertainties, including US tariff hikes, a poll showed on Friday.

The business survey index (BSI) of the country's top 600 companies by sales stood at 96.3 for next month, according to a monthly poll by the Federation of Korean Industries (FKI), reports Yonhap news agency.

A reading below 100 means pessimists outnumber optimists, while a figure above the benchmark means the opposite. The index has now remained below 100 for 43 consecutive months since April 2022.

The BSI for the manufacturing sector stood at 96.8, with that for the non-manufacturing sector coming to 95.8.

Within manufacturing, the electronics and communication devices industry posted an index of 115.8, followed by the automobiles and transportation equipment segment with 102.9. The oil refining and chemical industry, on the other hand, posted a reading of 93.5.

"Despite the improved performance of export-oriented industries, such as semiconductors, automobiles and ships, the prolonged slump in the petrochemical and steel sectors led to a pessimistic outlook for related companies," the FKI said.

Among non-manufacturing industries, the construction sector posted an index of 82.2, with the leisure and accommodation segment recording 92.9.

"Amid the challenging business environment, the contraction in the investment sentiment may become a significant burden on economic growth," Lee Sang-ho, head of FKI's economic research department, said.

"It is important to make efforts to stabilize the external trade environment and carry out bold regulatory reforms to revitalize business sentiment."

Meanwhile, business sentiment in South Korea rose to a 10-month high this month, driven by improvement in the chip and other manufacturing fields, and the government's stimulus measures, a central bank survey showed on Friday.

The Composite Business Sentiment Index (CBSI) for all industries stood at 91.6 in September, up 0.6 point from the previous month, according to data from the Bank of Korea (BOK).

The figure marked the highest level since November 2024, when the index came to 91.8. It also marked the second consecutive monthly gain.

The index measures corporate outlooks on overall business conditions, with a reading below 100 indicating that pessimists outnumber optimists.

The CBSI among manufacturers edged up 0.1 point from the previous month to 93.4 in September, while the index among non-manufacturers advanced 1.1 points to 90.5.

—IANS

- IANS

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Reader Comments

R
Rohit P
Interesting to see electronics and automobiles performing well while construction struggles. Similar pattern we see in India - manufacturing exports strong but real estate sector facing challenges. Hope our government learns from Korea's experience.
S
Sarah B
As someone working in international trade, I can confirm that these external uncertainties affect all Asian economies. India should use this opportunity to attract more manufacturing investments while Korea deals with these challenges.
A
Arjun K
43 consecutive months below 100 is really concerning. While the article mentions some improvement in September, the overall trend shows structural issues. India's business sentiment surveys have been more volatile but generally better positioned. 🤔
M
Michael C
The construction sector at 82.2 is particularly worrying. This could be an opportunity for Indian construction companies to explore partnerships in South Korea, especially with our expertise in infrastructure development.
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Nikhil C
While the article presents concerning data, I wish it had more analysis on how this affects India-South Korea trade relations. Our bilateral trade has been growing, and such economic challenges in Korea could impact our exports there.

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