South Korea’s business sentiment nears crisis as growth headwinds mount



Analysis South Korea’s business sentiment nears crisis as growth headwinds mount Even with political clarity and monetary easing, growth outlook remains capped by structural constraints Paul CaveyMay 15, 2025 SHARE COPY LINK FACEBOOK X LINKEDIN MASTODON The main digital display board at the Korea Exchange, July 25, 2024 \| Image: Korea Pro South Korean business sentiment has plunged to levels not seen since the 2008 global financial crisis, reflecting a convergence of negative developments in recent months. While upcoming political and monetary shifts could support a modest rebound, Seoul faces limits to any recovery in confidence and growth. SENTIMENT COLLAPSE SIGNALS STRAIN According to Bank of Korea (BOK) surveys, the current drag reflects multiple sources of strain, including political instability following former President Yoon Suk-yeol’s martial law declaration, the lingering effects of interest rate hikes from 2021 to 2023, the destabilizing effect of U.S. tariff pressure and long-standing vulnerabilities including household debt © Korea Risk Group. All rights reserved. No part of this content may be reproduced, distributed, or used for commercial purposes without prior written permission from Korea Risk Group. LATEST ANALYSIS 01Why South Korea cannot rebalance growth without stronger regional clusters 02Samsung, SK Hynix rejection exposes South Korea’s chip-grid financing problem 03Trump’s Cheongung social media post tests Seoul’s refusal to arm to Ukraine 04Lee Jae Myung risks public trust as South Korea rewires its justice system 05South Korea turns to Central Asia as Iran war tests its energy resilience 06Houthi seizure of Mokha sharpens South Korea’s Hormuz deployment dilemma 07Japan’s stronger yen may cut Korea’s import bill while raising funding costs 08South Korea leans on Europe as Hormuz deployment choices grow narrower

Analysis

South Korea’s business sentiment nears crisis as growth headwinds mount

Even with political clarity and monetary easing, growth outlook remains capped by structural constraints

Paul CaveyMay 15, 2025

South Korea’s business sentiment nears crisis as growth headwinds mount

The main digital display board at the Korea Exchange, July 25, 2024 | Image: Korea Pro

South Korean business sentiment has plunged to levels not seen since the 2008 global financial crisis, reflecting a convergence of negative developments in recent months. While upcoming political and monetary shifts could support a modest rebound, Seoul faces limits to any recovery in confidence and growth.

SENTIMENT COLLAPSE SIGNALS STRAIN

According to Bank of Korea (BOK) surveys, the current drag reflects multiple sources of strain, including political instability following former President Yoon Suk-yeol’s martial law declaration, the lingering effects of interest rate hikes from 2021 to 2023, the destabilizing effect of U.S. tariff pressure and long-standing vulnerabilities including household debt

South Korea’s business sentiment nears crisis as growth headwinds mount

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Paul Cavey