Around 40% of South Korean manufacturers anticipate a decline in economic conditions this year due to increased volatility in the foreign exchange market, as per a recent poll by the Korea Chamber of Commerce and Industry (KCCI) involving 2,208 manufacturing firms. Specifically, 14.7% foresee a clear deterioration, while 25.4% expect a slight downturn. Only 23.6% of respondents are optimistic about an improvement, with 36.4% expecting conditions to remain stable compared to 2025.
The survey revealed that 47% of respondents identified the strengthened U.S. dollar and escalating FX market volatility as significant challenges for the South Korean economy. Other concerns highlighted included fluctuations in crude oil and raw material prices, along with trade uncertainties linked to the policies of U.S. President Donald Trump’s administration. In response to these risks, only 20% of companies plan to expand operations this year, while the majority, 67%, intend to maintain the current status.
Notably, within specific sectors, 47% of semiconductor companies, currently benefiting from a supercycle boom, expressed intentions to expand their businesses in the upcoming year. Similarly, firms in the pharmaceutical and cosmetics industries displayed an overall positive outlook, with 39.6% and 39.4% of companies in these sectors, respectively, planning expansion efforts for the year.
Kang Seok-koo, the head of the research division at KCCI, emphasized that despite expectations for a simultaneous recovery in exports and domestic consumption, businesses are inclined towards cautious management practices due to varying recovery rates across industries and the impact of a strong U.S. dollar.
