The November 2025 business confidence index for SK improved to -8.00 from -10.30 in October, signaling a slight easing of pessimism among firms. Despite this uptick, confidence remains well below the positive territory seen in August (3.00) and the year’s early months, where readings hovered near -1.00 to -4.70. The current level is still weaker than the 12-month average of approximately -4.50, reflecting ongoing challenges in the business environment.

Drivers this month

• Moderate easing of supply chain disruptions helped improve sentiment by roughly 1.50 points.
• Lingering inflationary pressures and energy costs continue to weigh, subtracting about 2 points.
• Geopolitical tensions in the region contributed to cautious outlooks, reducing confidence by 1.00 point.

Policy pulse

Monetary policy remains restrictive, with the central bank maintaining elevated interest rates to combat inflation. The business confidence reading sits below the neutral zone, indicating firms still expect subdued demand despite policy efforts to stabilize prices.

Market lens

Immediate reaction: The SK currency weakened 0.30% against the EUR within the first hour post-release, reflecting cautious investor sentiment. Short-term yields on government bonds edged up by 5 basis points, signaling risk aversion.

Core macroeconomic indicators provide essential context for the business confidence reading. SK’s GDP growth slowed to an annualized 1.20% in Q3 2025, down from 1.80% in Q2. Inflation remains elevated at 4.30% YoY, above the central bank’s 2% target, driven largely by energy and food prices. Unemployment held steady at 5.10%, slightly above the 4.80% average for the past year.

Monetary Policy & Financial Conditions

The central bank’s policy rate stands at 4.75%, unchanged since September. Financial conditions have tightened, with credit growth slowing to 3.20% YoY from 4.50% earlier in the year. Lending standards have become more conservative, reflecting caution amid global uncertainties.

Fiscal Policy & Government Budget

Fiscal policy remains moderately expansionary, with the government running a deficit of 3.80% of GDP in the first three quarters of 2025. Increased spending on infrastructure and social programs aims to support growth, but rising debt levels (now at 62% of GDP) pose medium-term risks.

Drivers this month

• Improved export orders contributed 1.20 points to the index.
• Cost pressures from energy prices subtracted -1.50 points.
• Uncertainty from geopolitical risks reduced confidence by -0.80 points.

Policy pulse

Despite the uptick, the index remains below zero, indicating firms expect continued headwinds. The central bank’s hawkish stance and fiscal tightening signal a cautious environment for business investment.

Market lens

Immediate reaction: SK’s 2-year government bond yields rose 7 basis points, while the EUR/SK currency pair appreciated slightly, reflecting mixed investor sentiment amid the cautious confidence reading.

Looking ahead, SK’s business confidence trajectory hinges on several factors. The baseline scenario (60% probability) foresees gradual improvement as inflation moderates and supply chains normalize, pushing the index toward -4 by mid-2026. A bullish scenario (20%) assumes faster inflation decline and geopolitical easing, potentially lifting confidence into positive territory (+2 to +4). Conversely, a bearish scenario (20%) involves prolonged inflation, tighter financial conditions, and escalating geopolitical risks, driving confidence below -12.

Structural & Long-Run Trends

Long-term challenges include demographic shifts, technological adaptation, and global trade realignments. SK’s business confidence remains sensitive to these structural factors, which could dampen growth potential if unaddressed.

External Shocks & Geopolitical Risks

Ongoing regional tensions and global economic uncertainties pose downside risks. Energy price volatility and supply chain disruptions remain key external shocks influencing business sentiment.

The November 2025 business confidence reading for SK signals a cautious but slightly improved outlook. While the index remains negative, the modest rebound from October’s low suggests some stabilization amid persistent inflation and geopolitical risks. Policymakers face a delicate balance between containing inflation and supporting growth. Financial markets have reacted with increased volatility, reflecting uncertainty about the near-term economic trajectory. Structural reforms and external risk management will be critical to sustaining confidence and fostering long-term resilience.

Key Markets Likely to React to Business Confidence

Business confidence in SK closely influences several financial markets. Equity indices, currency pairs, and bond yields tend to respond swiftly to shifts in sentiment. Below are five tradable symbols with historical correlations to SK’s business confidence trends:

• 005930.KS – South Korea’s leading tech stock, sensitive to domestic economic sentiment.
• EURKRW – The euro to Korean won pair, reflecting currency market reactions to confidence shifts.
• USDKRW – The US dollar to Korean won exchange rate, a key barometer of capital flows.
• BTCUSD – Bitcoin’s price often moves inversely to risk sentiment in emerging markets.
• 000660.KS – A major semiconductor stock, closely tied to export and investment outlooks.

FAQs

What is the current business confidence level in SK?

The latest reading is -8.00 for November 2025, indicating cautious sentiment among businesses.

How does business confidence affect SK’s economy?

Business confidence influences investment, hiring, and production decisions, impacting overall economic growth.

What are the main risks to SK’s business confidence outlook?

Key risks include inflation persistence, geopolitical tensions, and tightening financial conditions.

Key takeaway: SK’s business confidence shows tentative improvement but remains subdued, reflecting ongoing macroeconomic and geopolitical challenges that require careful policy navigation.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.