Six of 10 Korean Inc. to raise prices and 2 to cut back investment on inflation: BOK

[Photo by MK DB]

Six out of 10 companies in South Korea plan to raise the prices of their products and services to respond to the steep hike in raw materials costs, while at least two can cut back investment and hiring this year.

According to a survey conducted by the Bank of Korea on 570 firms between May 12 and June 2, 61 percent said they will raise prices of their goods and services to cope with higher prices. Two out of 10 firms also have plans to adjust hiring and reduce new investment while only 23.6 percent plan to “wait and see.”

The survey, in particular, showed that companies in the service sector plan to raise prices (45 percent) and downsize workforce (32 percent), signaling sluggish employment figures in the second half.

Nearly 9 out of 10 surveyed companies expected inflation to stay strong throughout the year, although 50 percent of businesses in oil refining and chemical sectors saw prices to fall “slightly” or “remain unchanged” as they expect oil prices to stabilize in the months to come.

Businesses were most fretful of an economic recession – 27 points out of 100 – followed by a rise in inflation (26 points), and logistical disruptions and geopolitical risk (17 points).

“Businesses are most worried about rising inflation among other risks as they are aware of the impact logistical disruptions and geopolitical risk have on raw material prices,” said an unnamed official from the BOK.

The survey showed that four out of 10 firms experienced raw materials hike of more than 20 percent.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]