South Korea economy still cautious in January with steel and construction sectors under pressure

According to the monthly survey by the Federation of Korean Industries (FKI), the Business Survey Index (BSI) of the country’s 600 largest companies was measured at 95.4. The steel sector recorded 85.2 and the construction sector 85.7, marking the lowest levels; values below 100 indicate a majority of pessimists. The index has remained below 100 for 46 months since April 2022.

Exports are expected to increase for the seventh consecutive month in December, supported particularly by semiconductors and electronic components. However, industrial production remains weak; according to World Steel Association data, South Korea’s crude steel production in November 2025 was approximately 5.0 million tons, decreasing 4.8% year-on-year. This shows that the ongoing slowdown in steel and construction sectors and the fragility of the manufacturing industry continue to affect business sentiment.

The South Korean government is preparing a comprehensive plan to revive the steel sector and strengthen its policies. The Ministry of Trade, Industry and Energy stated that it will announce a general strategic plan in the first half of the year to support the steel industry against oversupply from China and other challenges. A working group consisting of industry and academic representatives has been established for this purpose. This step is viewed as an official and planned initiative to develop policies addressing the challenges faced by the sector.

Additionally, supportive statements and the government’s stance toward the sector sometimes trigger price movements, boosting market sentiment. Experts emphasized that maintaining strong exports and supporting the long-term outlook through strategic partnerships and energy projects could partially balance the pressure on the sector.