[Urgent Survey of Top 1000 Companies] "Gloomy Outlook" 7 out of 10 Expect Sharp Decline in Second Half Performance

Asia Economy-Korea Employers Federation Joint Survey

Raw Material Price Surge and High Exchange Rate Compound Challenges

"No High Expectations for Deregulation" Reaches 30%

[Asia Economy Reporter Oh Hyung-gil] Seven out of ten of South Korea's top 1,000 companies by sales are expected to see a sharp decline in performance in the second half of this year.

The surge in raw material prices and the global supply chain crisis, compounded by high interest rates and high exchange rates, have created negative external factors that threaten to materialize as damage to management.

Moreover, the "regulations" that President Yoon Seok-yeol referred to as "sandbags" that hold back companies have become obstacles to growth. Although the new government has shown a strong will to abolish regulations, three out of ten companies surveyed do not have high expectations.

This is interpreted as a result of past administrations calling for regulatory innovation at the beginning of their terms, but it ended up being just a temporary slogan.

On the 15th, Asia Economy conducted an urgent survey targeting the top 1,000 companies by sales in cooperation with the Federation of Korean Industries. The results showed that 77.5% of companies responded that recent external factors have had a negative impact on management. In contrast, only 22.6% responded that external factors had no impact (16.7%) or had a positive impact (5.9%).

In particular, seven out of ten companies (67.6%) viewed their second-half management performance more pessimistically than the first half. The causes cited were increased production costs due to rising raw material prices intensified by Russia's invasion of Ukraine (65.2%) and production disruptions caused by damage to the global supply chain (13.0%).

International oil prices have risen nearly 50% since the beginning of the year, and prices of key raw materials for manufacturers such as aluminum, nickel, and tin have more than doubled or tripled. Demand sluggishness due to domestic and foreign interest rate hikes (10.1%) and economic slowdown due to prolonged economic stagnation in China (5.8%) were also recognized as negative factors for corporate management. Accordingly, only 32.4% responded that their performance would improve compared to the first half.

Soaring interest rates and exchange rates are also factors darkening management prospects. The U.S. Federal Reserve (Fed) is expected to take a "giant step" by raising the benchmark interest rate by 0.75 percentage points at once, and the won-dollar exchange rate is expected to surpass 1,300 won soon.

Amid simultaneous and complex adverse conditions, regulations that tighten the grip on companies?from industrial safety represented by the Serious Accidents Punishment Act to labor, environment, taxation, and fair trade?are piling up.