S. Korea’s business sentiment further darkens in December at 26-mo low

[Photo by MK DB]

Business sentiment among Korean companies dipped to its lowest level in over two years as the country’s mainstay growth driver export continues to contract due to weakening global demand without signs of recovery in domestic demand hit by an economic downturn, data showed on Wednesday.

The business survey index (BSI) for all industries in December dropped by one point on month to stand at 74, marking the lowest in 26 months since October 2020 when it was tallied at 74, according to the data from the Bank of Korea.

A reading below 100 means that companies are more pessimistic than optimistic about future business conditions. Business sentiment continued to slide toward pessimism for the fourth consecutive month after a 3-point drop in September.

The survey for December was conducted on 3,255 companies from Dec. 13-20, of which 2,766 companies (1,639 manufacturers and 1,137 non-manufacturers) responded.

The BSI for manufacturers dropped three points on month to hit 71 in December, while the index for non-manufacturers marked 76, unchanged from the previous month.

Among the subcategories in the manufacturing sector, electronics, and video and communication equipment (-6 points) and chemicals and chemical products (-11 points) companies experienced a significant decline due to weak demand for global semiconductors and chemical materials.

The BSI for large companies and SMEs dropped 5 points and 2 points, respectively, while domestic consumer companies (-5 points) had worse sentiment than export companies (-1 point).