September BSI at 102...Domestic Demand Outlook Rebounds on Chuseok Boost and Currency Stabilization

Corporate Sentiment Turns Positive After Six Months
Manufacturing and Non-Manufacturing Sectors Register Simultaneous Gains for the First Time in 4 Years and 11 Months

The business sentiment among major domestic conglomerates has turned positive for the first time in half a year. Notably, not only export expectations but also previously sluggish domestic outlooks have surpassed the baseline, signaling a broadly improving corporate sentiment.

The Korea Economic Association announced on the 25th that, based on a survey of the top 600 companies by revenue, the September Business Survey Index (BSI) projection recorded 102.0. It is the first time in six months that the BSI has exceeded the baseline of 100, following the March figure of 102.7 prior to the outbreak of tensions between the United States and Iran.

Business Survey Index (BSI) Projection Trends. Korea Economic Association

The BSI quantifies corporations' perception of economic conditions; a reading above 100 indicates that more companies have a positive outlook, while below 100 suggests a more negative sentiment. In August, the BSI actual figure was 95.6, marking the 55th consecutive month of sluggish performance since February 2022.

In September, both the manufacturing and non-manufacturing sectors exceeded the baseline, raising expectations for economic recovery. The manufacturing BSI projection jumped by 13.3 points from the previous month to 101.7, while the non-manufacturing BSI projection rose by 10.9 points to 102.4. This is the first time since October 2021— a span of 4 years and 11 months— that both sectors have simultaneously shown positive projections.

Among the detailed manufacturing industries, six out of ten—including pharmaceuticals (125.0), automobiles, and other transportation equipment (109.7)—showed strong performance. The Korea Economic Association analyzed that, as the exchange rate stabilized and the burden of imported raw material and component costs eased, the recovery trend—previously limited to areas such as semiconductors—has now spread to various sectors including components and materials. The non-manufacturing sector also showed robust results, mainly in wholesale & retail (115.6) and transportation & warehousing (104.2), driven by the upcoming Chuseok holiday season.

In terms of subcategories, both domestic demand (100.3) and export (100.9) outlooks turned positive, leading to an overall improvement in sentiment. In particular, the domestic demand outlook, boosted by eased exchange rate pressures and the holiday effect, recovered to the baseline of 100 for the first time in 4 years and 3 months since June 2022, giving it added significance.

Export projections also maintained a strong trend, surpassing the baseline for four consecutive months despite ongoing external uncertainties such as instability in the Middle East. Although the investment projection (98.3) fell short of the baseline, it reached its highest level in 4 years and 2 months since July 2022, providing a positive signal.

Lee Sangho, head of the Economic Division at the Korea Economic Association, emphasized, "It is encouraging that the previously export- and semiconductor-driven corporate sentiment has now expanded to domestic demand and a wider range of industries. To ensure that this improvement in sentiment translates into actual investment and consumption, institutional support—such as expanding tax credits for domestic production and enacting the Service Industry Development Framework Act—should be provided."

This content was produced with the assistance of AI translation services.