Due to tariffs from the United States and sluggish domestic demand, domestic manufacturing corporations have had a negative outlook for the economy in the third quarter.
On the 29th, the Korea Chamber of Commerce and Industry conducted a survey of 2,186 corporations nationwide regarding the Business Survey Index (BSI), and the BSI for the third quarter was recorded at 81, an increase of 2 points compared to the previous quarter (79).
A BSI of over 100 indicates that more corporations view the economy for that quarter positively compared to the previous quarter, while a BSI below 100 indicates the opposite. Since the fourth quarter of 2021 (91), it has remained below the benchmark for 16 consecutive quarters.
In the third quarter, both exports (87) and domestic demand (79) were sluggish, and it was found that the outlook for domestic corporations was relatively more negative due to the downturn in the construction market and reduced consumption. Additionally, the outlook figures for medium-sized corporations (77) and small corporations (81) were relatively lower compared to large corporations (89).
The outlook by sector showed divergent feelings depending on tariff burdens and export performance. The semiconductor (109) and pharmaceutical (109) sectors, which fall under tariff exemption items, had a prevailing positive outlook. In particular, the semiconductor sector rose by 22 points compared to the previous quarter, exceeding the benchmark for the first time in a year. The cosmetics (113) sector, despite the impact of tariffs, continued its strategy of diversifying export markets to Europe and the Middle East, recording the highest outlook.
On the other hand, sectors subject to U.S. tariffs, such as steel (67) and automobiles (76), significantly fell below the benchmark. The refining and petrochemicals (72) sector experienced a deterioration in economic outlook due to increased uncertainty arising from structural stagnation in the industry and heightened price volatility.
Regional outlooks also clearly revealed the impact of tariffs. Jeju (100), where semiconductors and the food and beverage industry, which account for more than half of the region's exports, improved, had the highest index in the country. In contrast, Incheon (63) faced a strong negative outlook due to the sluggishness of the machinery equipment sector resulting from the construction market downturn and the impact of tariffs on automobiles and parts, while Daegu (64) and North Gyeongsang Province (69) stayed in the 60s due to poor performance in the steel industry and textile sector stagnation.
In inspecting the sales performance for the first half of the year, 54.1% of manufacturing corporations responded that achieving their sales targets would be difficult. Corporations expecting sales to fall short of their targets by more than 10% accounted for 16.4%, while 37.7% responded that they expected to miss their targets by a slight margin of within 10%.
Corporations identified 'sluggish domestic demand' (64.7%) as the main domestic risk affecting their business performance in the first half of the year. Among external factors, 'rising raw material prices' (30.9%) was the most cited, followed by 'weak overseas demand' (23.8%), 'exchange rate fluctuations' (19.3%), and 'tariff measures' (18.0%).
Kang Seok-koo, head of the KORCHAM research department, noted, "While the economic sentiment has slightly improved in some sectors, the burden of tariffs has led to a realization of decreased exports to the United States, meaning corporate burdens remain. With the new government's economic policy expectations acting positively on domestic sentiment, it is critical for the government and the National Assembly to provide policy support to secure momentum for economic recovery in the second half of the year."