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Korean business sentiment hits four-year low in January over growth concerns, political unrest

Published: 23 Jan. 2025, 10:07 Updated: 23 Jan. 2025, 17:03

Bank of Korea Governor Rhee Chang-yong speaks during a press conference at the bank headquarters in Seoul on Jan. 16. [NEWS1]

Korea's business sentiment fell to a four-year low in January amid concerns over growth momentum and political turmoil sparked by President Yoon Suk Yeol's martial law declaration, a central bank poll showed Thursday.

The Composite Business Sentiment Index, or CBSI, in all industries for January came to 85.9, down 1.4 points from the previous month, according to the survey by the Bank of Korea (BOK).

It marked the lowest level since September 2020, when the index came to 83.

In December, the index logged the sharpest decline since January 2023, as Yoon declared a shocking, albeit short-lived, martial law on Dec. 3, which led to his impeachment and arrest.

The outlook for February, however, rose 2.5 points to 85.4.

The index measures corporate prospects for business conditions. A reading below 100 means pessimists outnumber optimists.

The CBSI among manufacturers climbed 1.9 points from a month earlier to 89 in January, while that among nonmanufacturers lost 3.9 points to 83.6, the data showed.

The economic sentiment index, or ESI, which reflects sentiment among both consumers and businesses, rose 3.4 points to 86.7 for January, following a 9.6 point drop the previous month, the data showed.

The BOK earlier forecast the South Korean economy to expand 1.9 percent in 2025, slowing from last year's 2.2 percent expansion.

But the 2025 is widely expected to be lowered given political chaos, slowing export growth, sagging domestic demand and policy changes under the new Donald Trump administration, among other factors.

Yonhap