[비즈한국] Person A, a doctor in his 60s who ran an orthopedic clinic in Seoul, recently sold his practice. Although he had operated it successfully for over a decade, he decided that the recent economic climate was ominous. Even though cold weather is usually the peak season for orthopedic clinics, the number of patients has dropped significantly. This is a common worry shared by many clinics recently. A hospital director operating an orthopedic clinic in Gangnam, Seoul, said, "Patients who would have opted for surgery in the past now tell me they will just take medication and try to endure. Seeing more people tolerating pain makes me think next year's economy will be truly difficult." He added with concern, "My goal for next year is to avoid deficits without laying off any staff, but in over 20 years of practice, this is the first time I've been this worried about the new year."
Person B, in his 40s, who runs a bar in Seocho-dong, Seoul, has been feeling the shift in atmosphere since the Chuseok holiday. As the neighborhood is frequently visited by legal professionals, November to year-end usually brings significant year-end party revenue, but this year, November sales hit an "all-time low." B lamented, "In the 11 years I’ve run a bar in Seocho-dong, this is the first time November has been this hard. People say there’s an atmosphere of skipping company dinners, but it's gotten to a point where that alone can't explain it, so I'm very worried."
4 out of 10 large corporations choose to "maintain the status quo"
The growth forecast for South Korea's economy next year is higher than this year's. The IMF and the Bank of Korea expect 1.8%, while the Korea Institute for Industrial Economics & Trade projects 1.9%. This is nearly 1% higher than this year's forecast (IMF 0.9%).
However, the economy felt by large corporations is not good. Four out of 10 companies with 300 or more employees plan to implement austerity measures next year. A survey by the Korea Enterprises Federation of CEOs and executives from 229 companies with 30 or more employees regarding 2026 management outlooks showed that 4 out of 10 (39.5%) answered that their management policy for next year would be to "maintain the status quo." This was slightly higher than "austerity management" (31.4%) and "expansionary management" (29.1%).
Notably, for companies with 300 or more employees, the response for "austerity management" was dominant at 41.0%. In particular, companies that cited austerity as their top priority said they would focus on "rationalizing human resources management" (61.1%), "company-wide cost reduction" (53.7%), and "reducing new investments" (37%). It is the first time in nine years, since a 2017 outlook survey conducted at the end of 2016, that companies favoring an austerity approach have selected "rationalizing human resources management" as their most common concrete plan.
As for hiring plans for next year, the most common response was to maintain the current level (52.3%), while 41% of companies with 300 or more employees reported plans to reduce hiring.
Hoarding foreign currency despite the high exchange rate
The "austerity management" trend among companies is also evident in the rising balance of corporate dollar deposits at commercial banks. According to the financial sector, as of the 27th, the corporate dollar deposit balance at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) was approximately $53.744 billion, or about 79 trillion won. This is a 21% increase from the end of last month.
Normally, when the exchange rate rises, investors sell dollars to realize profits, causing the deposit balance to shrink. However, this month, an unusual phenomenon occurred where dollar deposits increased despite the sharp rise in the won-dollar exchange rate. This reflects the atmosphere of companies looking to accumulate more dollars as they increase investments in the U.S. and face heightened exchange rate uncertainty.
Small and medium-sized enterprises (SMEs) are in an even tougher spot. The representative of a large corporation's subcontractor worried, "We import parts from overseas, including China, to assemble and produce, so we naturally have to pay in dollars, forcing us to buy more. Since large corporations won't raise unit prices just because the exchange rate is high, the burden on us is increasing."
Concerns are rising that this will translate into an even greater burden for low-income families and the self-employed. The Korea Development Institute (KDI) analyzed in April that a 1 percentage point (p) rise in the won-dollar exchange rate leads to a 0.04%p increase in consumer prices in the same quarter. The Bank of Korea also stated, "We estimate that a 1% rise in the exchange rate results in about a 0.03% increase in consumer prices."