South Korea’s stock market index has declined for five straight months since July, marking the unusually long downward streak that reminds investors of major market upheavals in the past.

Problems are not limited to the stock market. Korean companies are trying to grapple with the looming challenges in trade and business environments by tightening their belts or delaying their investment plans in the face of growing uncertainties.

Two surveys released recently reflect the deepening worry about a cloudy business outlook among Korean companies. In the first survey on 239 companies with at least 30 employees, conducted by the Korea Enterprises Federation, 82 percent of respondents said the Korean economy, which depends heavily on exports, will suffer a negative impact as a result of protectionist policy during the second term of US President Donald Trump.

Notably, 7.5 percent of respondents hold the view that Trump’s policy, designed to keep China at bay, meanwhile, could benefit Korea. However, this is not a simple issue. Both the US and China are Korea’s major trading partners, and if China faces serious economic problems, it can also affect Korea in a negative way.

What’s clear, though, is that Korean companies are now taking the gloomy outlook seriously. Nearly half, or 49.7 percent, of respondents in the survey said they would switch into belt-tightening mode next year in a bid to tackle economic uncertainties, while 28 percent said they would maintain the status quo. The proportion of respondents planning to expand their business in 2025 was 22.3 percent.

The survey’s result should send alarms to the government’s policymakers in charge of trade, business and investment, especially given that nearly half of companies -- the highest rate since 2019 -- are opting for austerity management.

Austerity management will translate into cost reduction, a cut or freeze in the number of workforce and a decrease in investment, respondents said. Such belt-tightening measures are feared to put an extra damper on the already sluggish domestic demand and make it difficult for business managers to set up specific plans to push for a new growth business.

These concerns are reflected in another survey, conducted by the Federation of Korean Industries, a major business lobby group in Korea. The FKI survey on Korea’s 500 largest companies by revenue showed that 56.6 percent of 122 respondents said they are yet to finalize their investment strategies for the coming year.

Only 32 percent said they have already set investment plans, a 13 percentage-point drop from last year. Notably, 11.4 percent of respondents indicated they had no investment plans at all for 2025.

Companies which are yet to finalize investment plans cited organizational restructuring, the need to assess risks and uncertainty about next year’s economic outlook as the primary reasons for delaying investment plans.

Even among those companies that finalized their investment plans, 59 percent said they would maintain investment at similar levels to this year, while 28.2 percent of respondents plan to reduce investment. Only 12.8 percent said they would expand investment.

The rationale behind reduced or no investment plans reflects broader economic concerns. Negative forecasts for the global and domestic economy, a deteriorating investment environment and expectations of a shrinking domestic demand were among the most frequently cited factors.

Against this backdrop, a growing number of big companies are taking cost-cutting measures. They are moving to sell off noncore affiliates, conduct layoffs and streamline business organizations to stay competitive next year amid the negative outlook.

What should the government do to help companies refocus on investment and expansion? An official from the FKI was quoted by a local media saying, “The government should offer tax and financial incentives for active corporate investment.” It may be difficult for the government to reverse the negative business outlook, but policymakers should take note of the advice on incentives aimed at boosting investment.