Despite a strong export performance led by semiconductors, domestic manufacturers remain pessimistic about economic recovery. Large companies expect improvements in the fourth quarter, while small and medium-sized enterprises anticipate continued struggles.
According to a report released by the Korea Institute for Industrial Economics and Trade on October 18, the Business Survey Index (BSI) for the manufacturing sector's outlook for the fourth quarter stands at 97, unchanged from the previous quarter. The survey was conducted from September 7 to 18, involving 1,500 domestic manufacturers.
The BSI quantifies companies' assessments and expectations regarding the economy. A score above 100 indicates that more companies expect improvement than those predicting deterioration.
The fourth quarter sales outlook BSI is 97, down 2 points from the previous quarter's 99. The export outlook BSI decreased from 101 to 100, while the capital investment outlook fell from 100 to 99. Although the inventory and current profit outlooks rose by 1 point each to 99 and 95, respectively, they still remain below the baseline.
Sector-specific forecasts also show divergence. The sales outlook for wireless communication devices (103) and displays (102) exceeds the baseline, while semiconductors and chemicals remain at 99. The automotive, shipbuilding, and bio-health sectors are at 97, while the steel and textile sectors show particularly poor forecasts at 91 and 89, respectively.
Export performance highlights stark contrasts among sectors. According to the Ministry of Trade, Industry and Energy's 'September 2026 Export and Import Trends' report, semiconductor exports surged to $60.3 billion in September, a 262.8% increase compared to the same month last year. In contrast, steel exports rose only 3% to $2.2 billion, and textile exports fell by 7% to $900 million. This indicates that the recovery in exports for key manufacturing sectors, excluding semiconductors, is relatively limited, preventing a broader improvement in the manufacturing economy.
Disparities based on company size are also evident. The fourth quarter BSI for large companies stands at 104, exceeding the baseline, while small and medium-sized enterprises remain at 95, a 9-point gap. A separate survey conducted by the Korea Chamber of Commerce and Industry involving 2,413 manufacturing companies also reflected a similar trend. The fourth quarter manufacturing BSI rose by 6 points to 86 but still fell short of the baseline of 100. Six out of ten companies expect to struggle to meet their operating profit targets this year.
The primary factor worsening the manufacturing business environment is the burden of raw material prices. In a survey by the Korea Institute for Industrial Economics and Trade regarding factors negatively impacting business activities, 53% cited increased raw material costs as the most significant issue. This was followed by weak domestic demand and inventory accumulation (38%) and ongoing external uncertainties (34%).
In fact, the Bank of Korea reported on October 16 that the import price index in won terms rose by 1.7% compared to the previous month. The average price of Dubai crude oil in September soared to $113.71 per barrel, a 28.1% increase from $88.75 the previous month.
* This article has been translated by AI.
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