About half of South Korean companies plan to tighten management next year, a survey showed. The survey analyzed that companies are cutting costs amid concerns over sluggish domestic demand and the spread of protectionism following the inauguration of President Donald Trump's second term.

On December 1, the Korea Enterprises Federation announced the results of a survey of CEOs and executives of 239 companies with 30 or more employees in Korea on their business outlook for next year. According to the results, among the businesses that have made business plans, 49.7 percent of them said that they would tighten their business policies next year. This is the largest share since the 2019 survey (50.3 percent). 28 percent of them said they would maintain the “current level,” while 22.3 percent of them said they would expand their investment. Looking only at companies with 300 or more employees, 61.0 percent said they would “tighten” their business. This is the highest percent since 2016 (66.7 percent).

When it comes to specific implementation plans (multiple responses) of the companies that responded “tightening” management for next year, the most common response was to “reduce company-wide costs” (66.7 percent). This was followed by “rationalizing manpower management” (52.6 percent), “reducing new investments” (25.6 percent), and “restructuring the business sector” (21.8 percent).

When it comes to investment plans, 39.5 percent of companies plan to invest less than this year, 35.0 percent plan to invest at this year's level, and only 25.5 percent plan to invest more than this year. Companies with 300 or more employees (58.5 percent) are 25.7 percentage points more likely to say they will invest less this year than companies with less than 300 employees (32.8 percent). With regard to hiring, 44.6 percent of companies plan to hire at “this year's level.” This was followed by “reduce hiring” (36.9 percent) and “increase hiring” (18.4 percent). Companies with 300 and more employees (53.7 percent) are 22.6 percentage points more likely than companies with less than 300 employees (31.1 percent) to plan to hire less.

The main business challenges for the coming year (multiple responses) were “sluggish domestic demand” (66.9 percent) and “increasing labor cost burden” (64.0 percent). This was followed by “slowing growth in major countries such as the US and China” (19.7 percent) and “spread of global protectionism” (16.3 percent).

82.0 percent of respondents predicted that the policy direction of Trump's second term will be negative for the Korean economy. While there are differences by industry, 9.2 percent of companies believe there will be no overall impact, and 7.5 percent believe it will be positive due to countervailing benefits from keeping China in check.

The most common timeframe for a full-scale domestic economic recovery was “after 2026” (59.8 percent). “The second half of next year” was selected by 28.0 percent and “the first half of next year” by 8.4 percent. Only 0.8 percent said the recovery has already begun. On average, companies expected South Korea's economic growth rate to be 1.927 percent next year, similar to that of the Bank of Korea (1.9 percent).