Corporate Business Outlook Turns Negative Again After One Month... October BSI Falls to 98.6

Manufacturing and Export Sentiment Deteriorates Together
Only Domestic Demand and Non-Manufacturing Remain Resilient Amid Stronger Won

Economic sentiment among South Korea’s leading companies has turned negative again, falling below the baseline after just one month. This shift was primarily driven by deteriorating confidence in the manufacturing and export sectors.

According to the results of a Business Survey Index (BSI) conducted by the Federation of Korean Entrepreneurs (The Federation of Korean Entrepreneurs) on the top 600 companies by revenue, the BSI outlook for October 2026 stood at 98.6. This figure, which had bounced back to a positive 102.0 in September, dropped below the baseline of 100 after just one month. The actual BSI figure for September also registered at 98.9, maintaining a streak of underperformance for 4 years and 8 months since February 2022.

Survey results of the Business Survey Index (BSI) by the Federation of Korean Entrepreneurs. The Federation of Korean Entrepreneurs

The BSI is an index reflecting companies’ perception of current and expected business conditions: a score above 100 indicates that more companies are optimistic, while a score below 100 signals that more companies hold a pessimistic outlook.

Outlook diverged noticeably between manufacturing and non-manufacturing sectors. In manufacturing, the BSI forecast came in at 95.6, turning negative from 101.7 in the previous month. Within manufacturing, metals and fabricated metal products (107.7) and automobiles and other transport equipment (106.1) showed strength, supported by demand in shipbuilding. In contrast, most sectors remained sluggish, including food and beverages (84.2), which lost its holiday-related boost, oil refining and chemicals (85.2), which struggled with ongoing price instability and supply surplus, and pharmaceuticals (75.0).

Meanwhile, the non-manufacturing BSI forecast remained positive for two consecutive months, marking 101.8 on the back of eased import price burdens and optimism for improved domestic demand. The wholesale and retail trade (108.5) and professional, scientific, and technical services (108.3) posted high readings, while the construction sector (95.3) continued to stagnate due to heavy financial cost burdens from interest rate hikes.

By segment, the impact of a stronger won presented a stark contrast. The domestic demand BSI registered at 101.4, maintaining a positive outlook for two straight months thanks to lower import costs for raw materials and components resulting from the stronger local currency. Conversely, the export BSI dropped to 99.7, marking its first negative outlook in five months since May, amid concerns over weakened external price competitiveness and the risk of foreign exchange losses. Separately, employment BSI turned positive for the first time in 4 years and 1 month since September 2022, rising to 100.3.

Lee Sangho, Head of the Economic Headquarters at The Federation of Korean Entrepreneurs, stated, “There is ongoing concern about worsening corporate sentiment due to factors such as unstable raw material prices stemming from heightened tensions in the Middle East and global interest rate increases. To bolster business confidence, it is important to stimulate domestic industrial production by expanding domestic production tax credits and to provide special labor support within mega special zones.”

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