Seoul: The investment sentiment of South Korean companies towards research and development (R and D) projects plummeted to its lowest level ever last month, amid ongoing political turmoil and global economic uncertainties.
According to Yonhap News Agency, the R and D survey index (RSI) on the investment of 500 local companies with research institutes stood at 79.6 in December, a significant drop from 94.6 recorded the previous month. This marks the lowest reading since the Korea Industrial Technology Association (KOITA) began conducting the survey in 2013 and the first instance of the figure falling below 90.
A reading below 100 on the index indicates that companies plan to reduce their R and D investment, whereas a figure above 100 suggests increased investment intentions. KOITA attributed the sharp contraction in R and D investment sentiment to heightened economic uncertainties and ongoing political instability following the impeachment of President Yoon Suk Yeol, triggered by his failed martial law declaration late last year.
Analyzing further, the RSI for conglomerates decreased by 17.3 points to 80.3 in December compared to the previous month. Medium-sized enterprises saw their index drop to 85.6, down 10.7 points, while small businesses experienced a decline of 14.2 points to 73.8 during the same period.
Sector-wise, the construction industry experienced the steepest decline, with its RSI dropping 30.9 points to 65.5. The service and ICT industries also saw significant decreases, retreating by 27 points and 28 points to 74 and 70.5, respectively. The chemical industry's investment sentiment dropped 21.5 points to 71.6.