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Business sentiment at four year low in February over weak momentum: BOK survey

Published: 21 Feb. 2025, 10:22

A retail unit for rent in Seoul remains empty on Feb. 16, 2025. [YONHAP]

Korea's business sentiment fell to the lowest in over four years this month due mainly to weak domestic demand and economic uncertainty, a central bank poll showed Friday.

The Composite Business Sentiment Index, or CBSI, in all industries for February came to 85.3, down 0.6 of a point 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.

The index has been on a constant decline since November, with the sentiment worsening markedly after Yoon declared a shocking, albeit short-lived, martial law on Dec. 3, which led to his impeachment and arrest.

The outlook for March, however, rose 2.6 points to 88.

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

The CBSI among manufacturers climbed 1.1 points from a month earlier to 90.1 in February, but that among nonmanufacturers lost 1.9 points to 81.7.

Nonmanufacturers cited weak domestic demand, economic uncertainty and rising labor costs as major reasons for their view, according to the poll.

The economic sentiment index, or ESI, which reflects sentiment among both consumers and businesses, rose 3.5 points to 90.2, the data showed.

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

But the 2025 projection is widely expected to be lowered to around 1.6 percent, given sagging consumption and investment, political instability and uncertainty stemming from the Donald Trump administration's new trade and economic policies.

Yonhap