Accounting Association, CPA BSI Published... "Domestic Economic Slump Continues into Q2"

[Asia Economy Reporter Park Jihwan] Certified Public Accountants (CPAs) forecast that the domestic economic situation will continue in the second quarter, following the first quarter of this year.

According to the 5th issue of the CPA BSI (Certified Public Accountant Business Survey Index) published by the Korean Institute of Certified Public Accountants on the 24th, the BSI for the economic status in the first quarter (January to March) of this year, as evaluated by accountants, was 62, and the BSI for the economic outlook in the second quarter was 70. In other words, CPAs assessed that the economic downturn is expected to persist. A BSI above 100 indicates that positive responses outnumber negative responses, while a BSI below 100 indicates the opposite.

Accountants noted that the economic uncertainty may further increase due to the rapid spread of COVID-19 since late January 2020. The proportion of respondents who answered that the economy would worsen (46% in Q1 2020, 42% in Q2 2020) was higher than those who answered it would improve (7% in Q1 2020, 12% in Q2 2020). This shows that the possibility of economic improvement remains low.

The main factors for the economic downturn were cited as sluggish exports, domestic demand stagnation, and government policies. They considered the global economic slowdown, continued uncertainty in external trade conditions, and insufficient shifts in somewhat rigid labor policies.

Respondents who expected economic improvement cited 'the government's expansionary fiscal policy' as one of the key factors. They expressed the opinion that active fiscal policy by the government is necessary for economic recovery.