(C) Newsis

SEOUL – South Korean manufacturers expect their sales to retreat this year compared to 2025, as a combination of domestic consumption slumps, supply chain instability, and heightened financial market volatility clouds the industrial outlook.

According to a report released on January 18 by the Korea Institute for Industrial Economics & Trade (KIET), the Business Survey Index (BSI) for annual manufacturing sales was recorded at 96.

The BSI is measured on a scale of 0 to 200, where a reading below 100 indicates that more companies expect business conditions to worsen than improve. While the 2026 outlook is slightly more optimistic than last year’s 91, it remains below the neutral threshold, signaling a generally pessimistic sentiment across the sector.

Mixed Outlook by Industry The forecast varies significantly by sector. The Bio-Health industry was the only sector to post a positive outlook with a BSI of 107. Meanwhile, pillars of the Korean economy like Semiconductors and Shipbuilding remained flat at 100, suggesting they will maintain last year's performance. In contrast, the Automotive (93) and Steel (89) industries are bracing for a downturn.

Major Obstacles Manufacturers pointed to several "negative factors" currently hindering their operations:

Domestic Slump: 49% of respondents cited weak domestic demand and accumulating inventory as their primary concern.
Market Volatility: 43% highlighted the risks posed by fluctuating financial markets.
External Pressures: Intense competition (29%) and global supply chain uncertainties (24%) continue to weigh heavily on business sentiment.
An official from the institute noted that while some tech sectors are holding firm, the broader manufacturing base is struggling to find a breakthrough amid a cooling domestic economy and unpredictable global financial conditions.