Business sentiment in South Korea remains pessimistic for 42nd month

Tower cranes at a construction site Yonhap — Tower cranes at a construction site/ Yonhap

SEOUL, August 29 (AJP) - South Korea’s corporate outlook sank further into pessimism for the 42nd straight month, weighed down by U.S. trade measures that have struck at the heart of its semiconductor and steel industries, the nation’s largest business group said Friday.

A survey of the country’s 600 biggest companies by the Federation of Korean Industries showed the Business Survey Index for September at 93.2, below the 100 threshold that separates optimism from pessimism. The gauge has not crossed into positive territory since April 2022.

Manufacturers reported particularly bleak sentiment, at 92.6, while non-manufacturing firms fared only slightly better at 93.8.

The sharpest drop came in electronics and communications equipment, which includes semiconductors. That sector plunged 16.4 points to 94.7, after U.S. President Donald Trump threatened to slap 100 percent tariffs on chips — a warning that rattled an industry central to South Korea’s economy.

Metals and metal processing remained mired in the 80s for a third straight month, as Washington’s 50 percent duties on steel, aluminum and copper products went into effect in August.

“External trade risks and the prolonged slump in construction, which is depressing demand for cement and other raw materials, are the main forces behind the sustained weakness,” the federation said in its report.

Kim Dong-young davekim0807@ajupress.com