South Korea's business sentiment dipped to the lowest in 17 months in July, with companies bracing for rising inflation amid recession woes, a central bank poll showed Thursday.

The business sentiment index (BSI) came to 80 for July, down two points from the previous month, according to the survey by the Bank of Korea (BOK).

The tally is the lowest reading since 76 in February, 2021.

The index measures corporate prospects for business conditions in the following month. A reading below 100 means pessimists outnumber optimists.

The fall in BSI came as high prices of energy and commodities are expected to weigh on business performance.

Aggressive rate hikes by central banks around the globe are expected to add the firms' borrowing costs.

The BSI for manufacturers fell 3 points to 80, and the comparable reading for non-manufacturers decreased 2 points to 80.

The sentiment for manufacturers worsened amid growing worries about recession.

Among manufacturers, the BSI for large companies plunged 6 points over the cited period, and that for smaller firms remained unchanged.

The BSI for exporters dropped by 5 points, and the index for domestic demand-oriented businesses fell by 1 point, the survey showed.

The survey was conducted on a total of 2,797 firms, including 1,661 manufacturers, from July 13-20, the BOK said. (Yonhap)