Korean business sentiment continues to worsen on economic uncertainties

Korean business sentiment continues to worsen on economic uncertainties [Photo by MK DB]

Economic uncertainties continue to dim business sentiment, according to the central bank on Friday.

The Bank of Korea’s Business Survey Index (BSI) data for January shows that the index covering all industries hit 69, down from 74 in December. The index has fallen for a fifth straight month. The January figure is the lowest in 28 months, since September 2020 and the biggest month-on-month drop since March 2020.

The BSI data are drawn from surveys of businesses, based on their forecasts and assessments of their overall business operations. If the figure is under 100, it means that there are more negative answers than positive ones.

The January questionnaire surveyed 3,255 businesses between Jan. 10 and 17, with 2,739 businesses answering.

By category, the manufacturing BSI and the non-manufacturing BSI each saw a five-point fall, recording 66 and 71, respectively. Among participants in the survey, there were 1,636 manufacturing businesses and 1,103 non-manufacturing businesses.

Among the manufacturing segments, business outlook in the electronics, video & communication equipment sector was dim, with a five-point fall, attributed to lower sales and increased inventory following weak semiconductor demand.

The figures for manufacturers of basic metals and metal processing businesses saw a nine-point fall and a six-point fall, respectively. The falls were driven by higher raw material prices and sluggish downstream industries, including construction, automobiles and shipbuilding.

By manufacturer size, business sentiment among large corporations fell eight points, while that among small- and medium-sized enterprises fell one point. The index for export-oriented companies dipped eight points, far more than domestic-oriented companies, which fell three points.

Among non-manufacturing businesses, the index for information & communication businesses fell the most, with a 14-point fall, because January is the low season and the effects of the prior year-end’s budget consumption fade away.

A subcategory like expertise, science & technology services also had a downward-tilting index, with a 10-point fall, as there was less demand in expertise services and in advertisements after the World Cup games. The figure among wholesale and retail businesses also declined three points due to sluggish domestic demand.

The outlook index for February declined two points to 68 from the month prior. By category, manufacturing’s outlook fell three points and non-manufacturing’s figure fell two points.

“Pressure from the global economic downturn on top of higher prices brought the February outlook down,” the Bank of Korea said.