Junggyeonryeon Announces Results of '2022 Q2 Mid-sized Companies Economic Outlook Survey'
[Asia Economy Reporter Kim Cheol-hyun] The mid-sized enterprise business outlook index rebounded in the second quarter of this year after two quarters of decline since the third quarter of last year. The Korea Federation of Mid-sized Enterprises announced the results of the '2022 2nd Quarter Mid-sized Enterprise Business Outlook Survey' on the 4th, revealing this trend.
In this survey, the mid-sized enterprise business outlook index for the second quarter of this year recorded 97.5, rising 4.2 points compared to the previous quarter. The survey was conducted from February 22 to March 8, targeting 500 mid-sized companies. An outlook index above 100 means more companies expect a positive outlook for the next quarter compared to the previous quarter, while below 100 indicates the opposite. A representative from the Federation explained, "This result seems to reflect expectations for increased exports and expanded domestic demand due to the easing of social distancing, but concerns remain, such as the rise in raw material prices being cited as the top management difficulty in the manufacturing sector."
Specifically, the manufacturing business outlook index rose evenly across all industries compared to the previous quarter, recording 99.2. The electronic components sector (105.6) showed a positive outlook for seven consecutive quarters, and the primary metals sector (105.0) reflected expectations for steel demand recovery, rising 7.0 points mainly among steel sheet processing companies, resulting in a positive outlook. The automobile and trailer sector (97.5) shifted from a downward trend to an upward one, mainly among future car parts companies such as electric and hydrogen vehicles, but still remained below 100, indicating a predominantly negative outlook.
The non-manufacturing business outlook index rose 3.9 points from the previous quarter to 96.6. The publishing, telecommunications, and information services sector (92.9) saw the largest increase, and the wholesale and retail sector (95.5) rose 3.5 points, mainly among pharmaceutical wholesale companies. The transportation sector (91.4) outlook index fell 4.2 points, mainly among foreign cargo transportation companies, due to the impact of the Ukraine war, making it the most negative sector.
Regarding management difficulties for mid-sized enterprises, sluggish domestic demand ranked first (45.4%), followed by rising labor costs (39.4%). By sector, the biggest difficulty for manufacturing was the rise in raw material prices (58.7%), and for non-manufacturing, sluggish domestic demand (49.5%). Additionally, mid-sized enterprises generally forecasted exports (105.7) and domestic demand (100.1) in the second quarter more positively compared to the previous quarter.
The financial condition outlook index slightly increased by 0.2 points from the previous quarter to 96.5, but the food and beverage sector recorded a significant decline, mainly among grain milling and feed-related companies, due to factors such as Russia's control over grain exports. The manufacturing production scale outlook index rose 2.4 points from the previous quarter to 104.5, marking three consecutive quarters above 100.
Park Il-jun, Executive Vice Chairman of the Federation, stated, "Although the business outlook has turned positive due to the easing of social distancing, various concerns including financial issues are increasing in sectors directly affected by the Ukraine war, such as foreign cargo transportation and some food and beverage industries." He emphasized, "To ensure that the perceived business conditions of mid-sized enterprises translate into actual results, it is necessary to actively address urgent industry-wide challenges such as recovering individual companies' damages and the rise in raw material prices."
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