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

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.