Why is business sentiment in South Korea pessimistic for 43 months?
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Synopsis
As South Korea grapples with external uncertainties like US tariff hikes, business sentiment remains in a state of pessimism for the 43rd consecutive month. The latest figures reveal a troubling trend in both manufacturing and non-manufacturing sectors, highlighting the urgent need for regulatory reforms and stabilization of external trade to rejuvenate corporate confidence.
Key Takeaways
- The Business Survey Index stands at 96.3 for October.
- Pessimism has persisted for 43 months, primarily due to US tariff hikes.
- The manufacturing sector shows mixed results, with electronics performing well.
- Regulatory reforms are crucial for improving business sentiment.
- September saw a slight recovery in overall business sentiment, reaching 91.6.
Seoul, Sep 26 (NationPress) South Korea's business sentiment continues to be pessimistic for October, largely due to ongoing external uncertainties such as US tariff hikes, a recent poll disclosed on Friday.
The Business Survey Index (BSI) for the nation's top 600 companies by sales is projected at 96.3 for next month, as revealed by a monthly survey conducted by the Federation of Korean Industries (FKI), according to reports from Yonhap news agency.
A score below 100 indicates that pessimists outnumber optimists, while a score above this threshold signifies the contrary. The index has now remained under 100 for 43 consecutive months since April 2022.
The BSI in the manufacturing sector was recorded at 96.8, whereas the non-manufacturing sector reported a lower figure of 95.8.
Specifically, in manufacturing, the electronics and communication devices sector recorded an index of 115.8, followed by the automobiles and transportation equipment sector at 102.9. Conversely, the oil refining and chemical industry reported a lower index of 93.5.
“Despite its improved performance in export-driven sectors such as semiconductors, automobiles, and ships, the ongoing downturn in the petrochemical and steel industries has contributed to a bleak outlook for related companies,” stated the FKI.
Within non-manufacturing, the construction sector achieved an index of 82.2, with the leisure and accommodation sector at 92.9.
“Given the challenging business landscape, a decline in investment sentiment could pose a significant challenge to economic growth,” remarked Lee Sang-ho, head of FKI's economic research department.
“It is crucial to work on stabilizing the external trade environment and to implement bold regulatory reforms to rejuvenate business sentiment.”
On a brighter note, business sentiment in South Korea reached a 10-month high this month, driven by improvements in the chip and other manufacturing sectors alongside government stimulus measures, according to a central bank survey released on Friday.
The Composite Business Sentiment Index (CBSI) for all sectors stood at 91.6 in September, reflecting a 0.6-point increase from the previous month, based on data from the Bank of Korea (BOK).
This figure is the highest since November 2024, when it registered 91.8. Moreover, it marks the second consecutive month of growth.
The index gauges corporate outlooks on overall business conditions; a reading below 100 indicates pessimists outnumber optimists.
The CBSI among manufacturers increased by 0.1 point from the previous month to 93.4 in September, while the index for non-manufacturers rose by 1.1 points to 90.5.
Point of View
It is crucial to acknowledge the ongoing challenges faced by South Korea's business sector. The persistent pessimism, driven by external factors like US tariffs and internal economic pressures, warrants serious attention. Policymakers must act decisively to restore confidence among businesses to foster growth and stability.
NationPress
26/09/2025
Frequently Asked Questions
What is the current business sentiment in South Korea?
The business sentiment in South Korea remains pessimistic, with the Business Survey Index at 96.3 for October, marking the 43rd consecutive month below the optimism threshold.
What sectors are most affected by this sentiment?
Both the manufacturing and non-manufacturing sectors display pessimistic outlooks, particularly in the petrochemical and construction industries.
What measures are suggested to improve business sentiment?
Experts advocate for stabilizing the external trade environment and implementing bold regulatory reforms to revitalize business confidence.
