SMBA "COVID-19 Causes Small and Medium Enterprises' Sentiment to Hit Record Low"

On the 22nd, citizens are shopping at Tongin Market in Jongno-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Hyewon] As the negative impact of the novel coronavirus infection (COVID-19) has become full-fledged, an assessment has emerged that the overall economic conditions of small and medium-sized enterprises (SMEs) have worsened further. Recently, SME manufacturing and service production and exports have turned downward, and employment indicators and sentiment indicators have slowed due to the spread of the COVID-19 shock.

According to the May issue of 'KOSBI SME Trends' published by the Small and Medium Business Research Institute on the 25th, SME service production in March this year decreased by 7.1% compared to the same period last year, falling to the lowest level since the 2015 statistical revision. During the same period, manufacturing production decreased by 1.5% as the contraction of traditional key industries intensified.

Last month, SME exports decreased by as much as 13.3% compared to the same month last year, as key items centered on Asian countries performed poorly.

During the same period, the number of SME employees decreased by 538,000, recording a larger decline than during the financial crisis as employment deterioration spread mainly in the service sector.

Last month, the SME business sentiment index (all-industry business performance SBHI) was 55.6, showing poor performance to the extent that it set a new low since the all-industry statistics compilation in 2014.

However, last month, the business sentiment index (BSI) for small business owners and traditional markets rebounded to 73.8 and 80.0 respectively, supported by the calming of the infection spread and expectations of policy effects.

Jung Yutak, senior researcher at the Small and Medium Business Research Institute, said, “Recently, as domestic and international COVID-19 related lockdown measures and quarantine systems have been eased, expectations for the resumption of economic activities are rising; however, it is necessary to note that concerns about a second wave of infection and the possibility of prolonged economic recession are also emerging.”