Manufacturers take a dim view of the first quarter of this year, with the business survey index plunging to 87 from 95 for the fourth quarter of last year, according to the Ministry of Knowledge Economy on Sunday.
A reading below 100 means pessimists outnumber optimists.
The index was compiled by surveying 501 companies.
Most sectors including iron and steel and shipbuilding are expected to perform poorly. Many executives worry seriously that sales, domestic consumption, exports and household income will deteriorate.
Only precision machinery and semiconductor makers were slightly optimistic.