More than half of business groups in member countries of the Organisation for Economic Co-operation and Development (OECD) took a negative view of the global economy for the first half of this year, but the share expecting a sharp downturn fell sharply from the second half of last year, a survey showed.

The Korea Enterprises Federation said on Tuesday it released the Business at OECD (BIAC) report, the "2025 Economic Policy Survey", which contains the OECD business community's outlook for the first half of this year.

BIAC includes business groups from 38 OECD countries, including the federation. In the latest survey, business groups from 29 OECD member countries, accounting for 93.5 percent of member-country gross domestic product (GDP), responded.

Some 59.6 percent of the OECD business community said the global downturn would continue in the first half of this year. Another 39.8 percent forecast the economy would grow moderately.

Only 0.6 percent said they expect the economy to contract sharply. Such responses accounted for nearly half, or 49.5 percent, in the outlook for the second half of last year but fell substantially, indicating concerns about a steep downturn have eased, the federation said.

On the global business environment, the most common response remained "average" at 57.3 percent. "Good" was 20.3 percent and "bad" was 16.4 percent.

The federation interpreted the continued cautious outlook as reflecting that trade and geopolitical shocks are beginning to be seen not just as short-term risks but as medium- to long-term costs.

Investment expectations shifted dramatically. Most respondents, 74.9 percent, said "investment decrease" for the second half of last year, but 78.1 percent said "investment increase" for the first half of this year.

In particular, most respondents, 94.2 percent, expected investment to rise in artificial intelligence (AI), cloud and software. But more than half, 51.6 percent, expected inflation to rise this year, raising concerns that cost pressures could constrain investment.

The federation said the outlook aligns with the OECD's view that renewed inflationary pressure, greater financial market volatility and worsening fiscal conditions are major downside risks to the global economy this year, while productivity gains through AI investment are an upside factor.

Asked about constraints on corporate activity, respondents cited "geopolitical risks" at 85 percent, followed by "high energy prices and supply instability" at 81.6 percent, "tight labour markets and mismatch" at 78.5 percent and "trade and investment barriers" at 74.4 percent. Responses related to energy supply and labour markets rose more than threefold from the previous survey.

BIAC said, "Global corporate activity is shrinking due to constraints in external trade and financial conditions and geopolitical risks, prolonging low growth." It added, "Along with countries' efforts on structural reforms, we expect the OECD to play an active role in creating an environment to promote trade and investment and in coordinating global regulations."

Kim Bong-man (김봉만), head of international affairs at the federation, said, "The most notable point in this survey is that despite the global low-growth trend, corporate investment expectations, especially investment in innovation fields, rebounded clearly." He added, "To turn investment demand in innovation into actual results, bold regulatory improvement, expanding manpower in line with labour market demand, and securing stable energy sources are key, and it is time for the public and private sectors to put their heads together so Korea can secure an edge in international competition."

[Yonhap News Agency]