OECD South Korea Business Outlook Rises for 4th Month..."Expectations for Overcoming COVID-19"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] South Korea's indicator in the OECD's business outlook has risen for four consecutive months.

According to the OECD Business Confidence Index (BCI) compiled on the 25th, South Korea's BCI stood at 97.9 last month, up 0.4 points from the previous month. The BCI is an indicator forecasting future business conditions. A value above 100 indicates economic improvement, while below 100 indicates economic decline.

South Korea's BCI fell from 98.6 in December last year, before the spread of COVID-19, to 98.4 in January this year, and continued to decline until May (96.5). It only rose by 0.1 points to 96.6 in June and has maintained an upward trend since then.

Although South Korea's BCI is still below 100, indicating a prevailing expectation of economic downturn, and ranked 23rd among 29 countries with BCI data for September, there is a growing expectation that the economy will gradually improve.

Despite COVID-19 still raging in many parts of the world, this seems to reflect optimism that vaccines or treatments will be developed soon.

In particular, South Korea's COVID-19 spread has been less severe compared to other countries. Recently, social distancing measures were eased to level 1.

The OECD average BCI was 99.5. Among the 29 countries, seven had a BCI above 100 as of September, indicating economic improvement: Chile (100.7), Latvia (101.3), Lithuania (100.1), Slovenia (100.2), Sweden (100.2), Turkey (102.0), and the United States (100.7).

Hwang Se-woon, a researcher at the Korea Capital Market Institute, said, "As the development of COVID-19 treatments and vaccines becomes more visible, the possibility of economic recovery to pre-COVID-19 levels will increase. It can be seen as reflecting expectations that the economic recovery trend will become clearer around the first quarter of next year."

Meanwhile, a recent survey conducted by the Korea Institute for Industrial Economics and Trade from September 10 to 23 targeting 1,033 domestic manufacturing companies showed that the business outlook index for the fourth quarter was 88, and the sales outlook was 89.

Both the business and sales indices rose by 4 points compared to the previous quarter; the business outlook index rose for the first time this year, and the sales index increased compared to the previous quarter after two quarters.