South Korea’s corporate outlook turned negative again in April after a brief recovery the previous month, as escalating tensions in the Middle East weighed on business sentiment.
The Business Survey Index (BSI) for the country’s top 600 companies by sales came in at 85.1 for April, falling below the neutral level of 100, according to data released April 25. A reading above 100 indicates an improved outlook from the previous month, while a figure below 100 signals deterioration.
The index had risen to 102.7 in March—its first time above 100 in four years—but reversed course just a month later. The decline reflects broad-based weakness across both manufacturing and nonmanufacturing sectors, which posted readings in the mid-80s.
The manufacturing BSI fell to 85.6 in April from 105.9 in March, a drop of 20.3 points, marking the steepest decline since April 2020, when the index fell 24.7 points as the Covid-19 pandemic spread globally.
Among 10 manufacturing subsectors, eight recorded negative outlooks, with only pharmaceuticals and electronics and telecommunications equipment hovering near the neutral level. Industries directly exposed to crude oil supply showed notable weakness, including petroleum refining and chemicals, utilities, transportation and warehousing, and nonmetallic materials.
The sharp deterioration in sentiment was driven in part by surging global oil prices and rising shipping costs linked to Middle East tensions, the federation said.
The nonmanufacturing BSI also declined, falling 14.8 points from the previous month to 84.6, with all seven subsectors remaining below 100.
All seven key business categories tracked in the survey showed negative outlooks. Financial conditions—a measure of corporate liquidity—fell to 89.7, the lowest level since June 2023. Profitability, which reflects cost burdens and earnings conditions, dropped 7.1 points from the previous month.
Other indicators also weakened, including domestic demand, exports and investment, pointing to a broad slowdown in business activity.
The federation said companies are increasingly concerned about financial stability amid inflationary pressures and potential disruptions to global supply chains, raising fears of a broader economic downturn.
“Heightened tensions in the Middle East are fueling uncertainty over crude oil supply, dampening corporate sentiment,” a federation official said, adding that policy support is needed to prevent external risks from spilling over into the real economy.
