Eight out of ten major corporations are considering freezing their investments in the second half of 2026. Only one company indicated plans to increase investment compared to the first half of the year. While urgent investments are needed to secure future growth drivers such as artificial intelligence (AI) and advanced industries, a combination of high interest rates, high exchange rates, and concerns over a global economic slowdown continues to hinder corporate investment.
According to a survey conducted by the Korea Economic Association (KEA) through the polling agency Monoresearch, which targeted the top 500 companies by revenue, 79.2% of the 106 responding companies stated they would maintain investment levels similar to the first half of the year.
In contrast, 15.1% of respondents indicated plans to increase investment, while 5.7% said they would reduce it.
The primary reason companies are considering expanding investments is to secure future growth drivers such as AI and advanced industries (33.3%). Other factors include enhancing competitiveness through proactive investments (29.2%) and improvements in market conditions and demand increases (20.8%).
Reasons for contemplating investment reductions include: high exchange rates and raw material cost burdens (38.9%), declining profitability and funding challenges (22.2%), and global economic slowdown and weak demand (16.7%).
Additionally, one in four major corporations is considering expanding investments in regional areas within the next three years, aligning with recent government policies aimed at promoting regional investment. Meanwhile, 51.9% of respondents indicated they have no plans for regional investments, and 20.7% were uncertain.
When deciding on new investments in regional areas, companies identified the need for financial support such as tax reductions and subsidies (36.2%) as the most critical factor. Other considerations included building industrial ecosystems with partners (18.2%), expanding logistics and transportation networks (13.2%), and enhancing industrial infrastructure such as power and water supply (12.9%).
This year, companies rated the domestic investment environment at 58.3 out of 100, a slight increase from last year's score of 57.2, though the KEA noted that the improvement was minimal.
Companies cited the most significant investment challenges as: rigidity in the labor market and uncertainty in labor relations (44.0%), tax and quasi-tax burdens (20.8%), investment-related permits and location regulations (16.4%), and regulations related to the environment, safety, and ESG (11.6%).
Key policy measures the government should prioritize include: easing investment regulations such as permits and location restrictions (24.5%), stabilizing interest rates and improving funding conditions (19.8%), revitalizing domestic demand (19.2%), and expanding tax support for investment and R&D (13.8%).
Lee Sang-ho, head of the KEA's Economic Division, stated, "Companies continue to feel regulatory burdens during the investment process, and concerns over recent interest rate hikes are leading to demands for improved funding conditions. Despite challenging circumstances, companies are striving to maintain their investment momentum, so it is essential to create a tangible investment environment through regulatory improvements and stable funding conditions."
* This article has been translated by AI.
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