Over Half of Companies Say "Business Conditions Will Be Difficult Next Year" Amid Sluggish Domestic Demand and High Exchange Rate

Amid continued downward pressure on the economy, including sluggish domestic demand and a high exchange rate, it has been found that more than half of major domestic companies have a negative outlook on business conditions in 2026. Companies identified sluggish domestic demand and exchange rate volatility as the biggest risk factors for next year’s management.

The Federation of Korean Industries announced on December 22 the results of the “2026 Corporate Business Environment Perception Survey,” which was conducted by the market research firm Mono Research and targeted the top 1,000 domestic companies by sales. The survey was conducted from November 25 to December 3, 2025, with a total of 150 companies responding.

According to the survey, 52.0% of responding companies said that overall business conditions in 2026 would be difficult. Meanwhile, 44.7% expected conditions to be favorable, and 3.3% responded that they were unsure. Notably, 18.0% of companies answered that conditions would be very difficult, while only 3.4% said they would be very favorable.

Among companies forecasting difficult business conditions, the most frequently cited reason was a downturn in their respective industries, accounting for 31.6%. This was followed by continued economic recession at 26.5% and ongoing global uncertainty at 21.4%. Other reasons included increased various cost burdens, worsening financing conditions, and persistent regulatory risks.

When asked about the domestic risk factors expected to have the greatest impact on business management next year, 32.2% pointed to sluggish domestic demand and delayed recovery as the most significant. This was followed by intensifying inflation at 21.6%, delays in interest rate cuts or interest rate hikes at 13.1%, and policy and regulatory uncertainty at 12.5%. Some respondents also expressed concerns about labor market rigidity, capital market volatility, and instability in the real estate market.

As for global risk factors, 26.7% cited increased volatility in the foreign exchange market, including exchange rates, as the most significant. This was followed by strengthened protectionism and increased export barriers at 24.9%, global economic slowdown and delayed recovery at 19.8%, and instability in import prices for energy and raw materials at 15.3%. Other concerns included geopolitical risks, global oversupply, and instability in international financial markets.

In this business environment, companies stated that their top management strategy for 2026 would be to advance and upgrade their existing businesses, with 34.4% selecting this option. Discovering future growth engines and entering new businesses followed at 23.6%, and market diversification at 18.2%. Only 8.2% of companies chose cost reduction and operational efficiency through restructuring.

Currently, the most significant management difficulty felt by companies is poor performance, cited by 29.8%. This was followed by difficulties in supply chain management, such as raw materials, at 22.2%, and delays in technological innovation and new business development at 11.1%. Many companies also cited challenges in workforce recruitment, financing, and responding to policy risks.

Regarding the most urgent policy tasks the government should pursue to improve the corporate management environment, 18.9% cited the relaxation of corporate regulations and innovation of the regulatory system as the top priority. This was followed by boosting domestic demand at 17.8%, resolving trade uncertainties at 16.9%, and stabilizing the financial and foreign exchange markets at 15.8%. There were also calls for policies to stabilize supply chains, support research and development investment, and foster talent.

Lee Sangho, Head of the Economic and Industrial Division at the Federation of Korean Industries, said, “With unstable external conditions and delayed domestic recovery overlapping, companies are feeling the burden for next year’s management. The government needs to swiftly pursue bold regulatory innovation, support for investment in advanced new industries, and policies to revitalize domestic demand and exports so that the vitality of companies, which drive economic growth, is not undermined.”