A Bank of Korea survey shows that business sentiment in South Korea weakened in March, with the composite business survey index (CBSI) falling to 94.1, down 0.1 points from February. Rising raw material costs and the widening Middle East crisis tied to air strikes involving the U.S. and Israel against Iran are cited as key sources of economic uncertainty, and the April outlook is expected to deteriorate further to 93.1 despite continued strength in IT exports.

Survey highlights and significance

According to the Bank of Korea (한국은행) regular company survey, the March reading of the composite business survey index (CBSI) stood at 94.1, marking a slight decline from February. As an official and recurring measure of corporate sentiment, the CBSI is widely regarded as a reliable barometer of short-term business conditions in Korea. The marginal fall nonetheless signals an erosion of confidence that policymakers and market watchers will monitor closely, especially since sentiment can influence investment and hiring decisions even before more concrete data appear.

Why firms are more cautious

Respondents to the Bank of Korea’s survey attributed the weaker sentiment primarily to two factors: higher costs driven by rising raw material prices and heightened economic uncertainty stemming from the Middle East crisis—notably the expansion of conflict following U.S. and Israeli strikes linked to Iran. Those developments have raised concerns about energy and commodity supply chains, cost pass-through into production, and broader geopolitical risk that can depress demand and complicate planning for exporters and manufacturers.

Outlook for April and the role of IT exports

The survey’s forward-looking indicator points to a further decline, with the April business outlook index expected at 93.1, suggesting that firms anticipate continued headwinds. That negative tilt persists even as Korea’s IT exports remain a bright spot; exporters in information technology sectors have shown resilience, but according to the provided source material, their strength has not outweighed the pervasive downside expectations among companies more broadly. Available reporting suggests that, while export momentum helps, it has not been sufficient to offset cost pressures and geopolitical uncertainty in firms’ sentiment.

Implications for policymakers and markets are straightforward: a sustained decline in sentiment could translate into weaker domestic demand and slower investment. Given the Bank of Korea’s role in gauging economic conditions through this regular survey, a string of softer CBSI readings would likely factor into macroeconomic assessments and decisions about monetary policy stance, especially if commodity-driven inflationary pressures and external tensions persist.

This report is based on the Bank of Korea’s regular survey as summarized by the source, published by 한국타임즈 on 2026-03-27. The survey’s status as an official, recurring indicator means the numbers are considered a credible snapshot of firms’ short-term expectations, though subsequent data releases will be needed to confirm any lasting trend.