The negative economic outlook for domestic companies in South Korea has continued for 37 consecutive months. The Korea Economic Research Institute (KERI) announced today (26th) that the Business Survey Index (BSI) forecast for April, surveyed among the top 600 companies by sales, was tallied at 88.0.
A BSI above the benchmark of 100 indicates a positive economic outlook compared to the previous month, while a value below 100 indicates a negative outlook. Since April 2022 (99.1), the BSI forecast has fallen below the benchmark every month, setting a record for the longest slump in history.
Although there appeared to be a slight rebound with BSI values of 84.6 in January, 87.0 in February, and 90.8 in March of this year, the index fell back to the 80s within a month. The manufacturing sector recorded a BSI of 92.0, while the non-manufacturing sector recorded 84.2.
The non-manufacturing sector has been below 90 for four consecutive months since January, a situation not seen since April to July 2020 when domestic demand was constrained due to COVID-19 social distancing measures. It was forecast that all segments in the non-manufacturing sector, except for leisure, accommodation, and dining (100.0), would be sluggish.
Within non-manufacturing, the BSI stood at 68.4 for electricity, gas, and water supply, 75.0 for information and communication, 76.2 for construction, 88.5 for transportation and storage, 90.4 for wholesale and retail trade, and 92.9 for professional, scientific, technical and business support services.
In the manufacturing sector, textiles, clothing, leather, and footwear (80.0), food and beverages, tobacco (83.3), petroleum refining and chemicals (89.7), electronic and communication equipment (86.7), automobiles and other transportation equipment (90.9), and metal and metal products (92.0) were below the benchmark.
In terms of different survey sections, BSI values indicated a negative outlook across all areas: employment (91.4), domestic demand (91.4), financing (92.2), profitability (93.0), investment (93.3), exports (93.9), and inventory (102.5). A BSI above 100 in the inventory section indicates excess, which is also negative.
Lee Sang-ho, head of the KERI Economic and Industrial Headquarters, stated, “The recent rise in global trade uncertainty is making concerns over a slowdown in major economies a reality,” and emphasized, “There is a need to ease corporate merger regulations and avoid delaying corporate decision-making on investment and business restructuring by amending corporate law.”
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