BIAC Survey on Economic Policy Among OECD Members
36 Member Countries' Economic Organizations Respond
'Good' Business Environment Responses Drop by 62% from Previous Year
Over 97% Say "Trade Barriers Have a Negative Impact"
Investment Outlook for Next Year Also Negative... OECD's Role Anticipated
Major private economic organizations in leading advanced countries belonging to the Organisation for Economic Co-operation and Development (OECD) predict that the global economy will sharply contract in the second half of this year. Given that many OECD member countries are key trading and investment partners for South Korea, this subdued sentiment and outlook are expected to have a significant impact on the Korean economy as well.
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According to the Korea Economic Research Institute on July 3, the OECD Business and Industry Advisory Committee (BIAC) recently conducted a "2025 Economic Policy Survey" among economic organizations in member countries and released a report with these findings. BIAC includes economic organizations from 45 countries, including the Korea Economic Research Institute, and 36 of these member organizations participated in the survey.
According to the report, economic organizations in OECD member countries expect the business environment in the second half of this year to deteriorate compared to the previous year. In last year's autumn survey, 78% of respondents rated the business environment as "Good," but this year, that figure dropped sharply to 16%, a decrease of 62 percentage points. Among the respondent countries, 60% expect that recent changes in trade policy will result in losses amounting to at least 0.5 percentage points of their country's GDP, and 37% anticipate a decrease of more than 0.25 percentage points of GDP.
Notably, more than 97% of all respondent countries answered that trade barriers would have a negative impact on their domestic economic activity. This is interpreted as a result of growing uncertainty in the international trade order, stemming from the U.S. government's tariff policies and the review of trade agreements following the inauguration of President Donald Trump.
This negative perception is also reflected in companies' investment outlook. In last year's survey, 76% of responding OECD member countries answered that investment would "increase moderately" in the following year, but this year, that proportion plummeted to 19%. The proportion of those who answered that investment would "decrease moderately" reached 70%, indicating a sharp contraction in corporate investment sentiment. Among the respondent countries, 55% expect inflation to rise compared to last year, raising concerns that price pressures could intensify again.
In response, BIAC analyzed, "The continued spread of protectionism and trade barriers is acting as a structural risk across the global economy," and added that this is "rapidly undermining business sentiment and investment confidence among companies."
As for factors restricting corporate activity, the most common response was geopolitical uncertainty (86%), followed by trade and investment barriers (66%), supply chain disruptions (43%), energy prices (24%), and labor market imbalances (21%). Concerns about regulatory and administrative burdens such as labor (18%) and tax burdens (16%) also remained high.
Regarding policy priorities for the OECD to respond to global economic uncertainty (multiple responses allowed), the most frequently cited areas were international trade (93%), digital policy (58%), and climate and energy policy coordination (53%). In particular, the high proportion of responses for "international trade" indicates that countries view the restoration of the global trade order as their top policy priority.
BIAC emphasized regarding this survey, "Global companies have determined that it is no longer possible to respond to expanding trade barriers and geopolitical conflicts with domestic policies alone, and there is a growing perception that the OECD must function as a key pillar of multilateral cooperation, leading the restoration of trade order and coordination of digital norms."
Kim Bongman, head of the International Division at the Korea Economic Research Institute, stated, "Uncertainty over U.S. tariff policy, the spread of protectionism, the prolonged war in Ukraine, and, more recently, conflicts in the Middle East involving Iran and Israel have all heightened concerns for our export-dependent economy due to increased geopolitical risks." He added, "With the recovery in domestic demand also limited, now is the time for the public and private sectors to work together closely to respond thoroughly to changes in the external trade environment."
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