Around 40 per cent of South Korean manufacturers expect economic conditions to deteriorate this year amid increased volatility in the foreign exchange (FX) market, a poll showed on Tuesday.

According to the poll conducted recently by the Korea Chamber of Commerce and Industry (KCCI) on 2,208 manufacturing firms, a total of 40.1 percent of respondents said they expect a deterioration in economic conditions, reports Yonhap news agency.

In detail, 14.7 per cent of respondents pointed to a clear deterioration, while 25.4 per cent expected a slight downturn.

Of the respondents, only 23.6 per cent said they expect an improvement, while 36.4 per cent said conditions would remain unchanged from 2025.

The KCCI said 47 per cent of respondents cited the strengthened U.S. dollar and growing volatility in the FX market as major drags on the South Korean economy.

Other major concerns included volatility in crude oil and raw material prices, as well as trade uncertainties stemming from policies of U.S. President Donald Trump's administration.

Citing such risks, only 20 percent of respondents said they plan to expand their operations this year, while 67 percent said they would maintain the status quo.

Per sector, 47 per cent of companies in the semiconductor industry, currently enjoying an industrywide supercycle boom, said they plan to expand their businesses this year.

Pharmaceutical and cosmetics firms also painted an overall optimistic outlook, with 39.6 per cent and 39.4 per cent of firms in the sectors, respectively, saying they plan to expand their businesses this year.

"Despite expectations that exports and domestic consumption will recover simultaneously this year, businesses are set to maintain a prudent management stance due to uneven recovery across industries and a strong U.S. dollar," Kang Seok-koo, head of the research division at the KCCI, said in a release.