Manufacturing Economy Expected to Rebound in March... Exports and Domestic Demand Seen Improving Together

KIET Releases "Industrial Economy Expert Survey Results for February 2026"

Business Conditions at Highest Level Since March 2024

Semiconductors, Automobiles, and Steel Strong; Bio-Health and Displays Expected to Remain Weak

Yonhap News

There is a forecast that the domestic manufacturing economy will show a clear rebound trend starting in March. With the recovery in exports being joined by expectations of an improvement in domestic demand, the overall business conditions index has been assessed as the most optimistic in about two years.

According to the "Industrial Economy Expert Survey Results for February 2026" released by the Korea Institute for Industrial Economics & Trade (KIET) on the 22nd, the business outlook index for the manufacturing sector in March came in at 117, up 3 points from the previous month (114). This is the highest level since March 2024. In particular, both domestic demand (125) and exports (130) posted double-digit gains and significantly exceeded the baseline of 100. The production level is also expected to rise in tandem to 126.

Looking at the detailed components, the investment outlook stood at 116, profitability at 112, and product prices at 123, all above the baseline. In contrast, the inventory outlook came in at 99, below the baseline, suggesting that inventory pressure is not expected to be heavy.

As of February, the manufacturing economy maintained a moderate trend. The current business conditions index was 103, remaining above the baseline for seven consecutive months, but it was down 1 point from the previous month (104). Domestic demand, at 99, was still slightly below the baseline, but it rebounded by 3 points from a month earlier, while exports rose 4 points to 107, continuing their improving trend. The production level was 105, staying above the baseline for the fourth consecutive month, and investment (108), profitability (101), and product prices (114) also all exceeded 100. Inventories, at 100, were assessed to be at an appropriate level.

By sector type, there were clear differences in performance. Based on the February current conditions, the ICT sector recorded 130, the highest level since July 2024, showing a sharp improvement, whereas both the machinery sector (90) and the materials sector (90) were below the baseline. In particular, the materials sector fell 10 points from the previous month and slipped back below 100.

However, the March outlook shows that expectations for a recovery are spreading. The ICT sector is expected to remain at a high level of 129, while the machinery sector is projected to surge 12 points to 114. The materials sector is also expected to rise for the third consecutive month to 118, coming in above the baseline.

By detailed industry, semiconductors (178), mobile phones (113), home appliances (113), and shipbuilding (113) were above the baseline in the February current conditions. In particular, semiconductors jumped 22 points from the previous month, showing the strongest recovery. In contrast, automobiles (70), textiles (79), and bio-health (95) were below the baseline. Automobiles fell 22 points from the previous month, with the weakness standing out.

In the March outlook, many industries, including semiconductors (178), home appliances (125), automobiles (122), chemicals (121), and steel (133), are expected to exceed the baseline. The automobile sector is projected to rebound sharply, with its index soaring 30 points in just one month, significantly heightening expectations of a recovery. On the other hand, displays (93) and bio-health (91) are expected to remain below 100.

This survey was conducted from February 4 to 11 on 130 experts in major domestic industries. The index was compiled by combining business conditions, demand (domestic demand and exports), supply (production, inventories, and investment), and profitability. A reading above 100 indicates an improvement from the previous month, while a reading below 100 indicates a deterioration.