SME Economic Outlook Rebounds for 2 Consecutive Months... "Effects of Social Distancing Easing and Extended Business Hours"

Korea Federation of SMEs Announces Results of 'March Small Business Economic Outlook Survey'

[Asia Economy Reporter Kim Bo-kyung] Due to government measures such as the easing of COVID-19 social distancing levels and the extension of business hours, the Small and Medium Enterprise (SME) Business Outlook Index showed a rebound for two consecutive months.

The Korea Federation of SMEs announced on the 25th the results of the "March 2021 SME Business Outlook Survey," conducted from the 15th to the 22nd with 3,150 SMEs.

According to the results, the SME Business Outlook Index for March was 76.2, an increase of 6.9 points compared to the previous month. The Business Outlook Index is based on 100 points; a score above 100 indicates economic improvement, while below 100 indicates economic downturn.

This marks a rebound for two consecutive months in February (69.3) and March (76.2) following the prediction of business slowdown in January (65.0) due to the third wave of COVID-19.

It is analyzed that recent measures such as easing social distancing levels in the metropolitan and non-metropolitan areas and extending business hours until 10 PM positively influenced the overall industry's perceived business conditions.

The manufacturing sector's business outlook for March was 86.3, up 9.7 points from the previous month (up 6.7 points year-on-year), while the non-manufacturing sector was 71.0, up 5.4 points from the previous month (down 6.9 points year-on-year).

The construction industry (74.5) rose 8.9 points from the previous month, and the service industry (70.3) increased by 4.7 points from the previous month.

In February, the main difficulties faced by SMEs were dominated by sluggish domestic demand (67.0%). This was followed by rising labor costs (41.8%), excessive competition among companies (39.2%), and rising raw material prices (26.8%).

The average operating rate of small and medium manufacturing enterprises in January was 69.6%, a decrease of 0.3 percentage points from the previous month (a decrease of 1.0 percentage point year-on-year).