It said that while sales did move up, sales totaling 2,250 trillion won ($2 trillion) are smaller than the 2,291 trillion won tallied in 2012, a clear sign of difficult times.

The latest findings showed that sales by companies belonging to the country's leading conglomerates continued to fall last year, with manufacturing also posting negative growth during the one year period. Smaller companies did better along with the non-manufacturing sector.

The think tank under the Federation of Korean Industries said that while sales have been falling, local companies did manage to post operating profits, mainly by stringent cost reduction efforts.

KERI said that local companies have been engaging in measures to boost efficiency and cut costs, that was further helped by a drop in global commodities prices.

"Because of such actions, the sales cost ratio of South Korean companies have been falling and stood at 80.11 percent in 2016 from 83.43 percent in 2012," the institute said.

Lower numbers are good for companies because they show less resources being used to create goods and services.

Despite some improvements in operating profits, the average margin for South Korean companies stood at 4.7 percent in 2016.

This was smaller than the numbers tallied for Japanese and Chinese companies in the same year that reported operating profits of 5.8 percent and 6.2 percent each.

"The halting of the slide in sales last year is a positive development, but it can be said that growth has stalled for the most part," KERI said. It argued that to overcome the situation, the country as a whole needs to push forward deregulation and engage in business-friendly policies going forward. (Yonhap)