Certified Public Accountant "Economic Slowdown Expected in Q2... Likely to Continue into Q3"

Photo by Korea Institute of Certified Public Accountants

[Asia Economy Reporter Lee Jung-yoon] The Korean Institute of Certified Public Accountants announced on the 29th that the 'CPA Business Survey Index (CPA BSI)' for the second quarter of this year was 87. The BSI is based on 100, with values above indicating economic improvement and values below indicating economic deterioration.

The current BSI had been above 100 for four consecutive quarters since 2021, indicating economic improvement. However, in the second quarter, it fell below 100, showing a worsening economy. This is the first time the current BSI has dropped below 100 since the fourth quarter of 2020.

This appears to reflect significantly negative impacts on economic assessments due to the prolonged Russia-Ukraine war, rising raw material prices, and continuous interest rate hikes aimed at stabilizing inflation.

The forecast for the third quarter is 78, suggesting continued economic sluggishness. After recording 143 in the third quarter of last year, the index has been declining for four consecutive quarters and fell sharply below 100 again in this third quarter.

The major detailed factors expected to affect the domestic economy this year include ▲ raw material prices and inflation (32%) ▲ global economic trends (20%) ▲ changes in monetary policy direction and funding environment (such as the tightening level of the U.S. Federal Reserve (Fed) and interest rate hikes) (17%) ▲ impacts from COVID-19 (such as changes in quarantine systems and consumer sentiment) (8%) ▲ global supply chain disruptions (8%).

Most major industries, such as distribution (119) and textiles/apparel (116), have current BSI values above 100, indicating economic improvement. Conversely, the food and beverage (98), construction (86), and pharmaceutical/biotech (86) industries fell below 100, being identified as sluggish sectors.

This survey was conducted targeting full-time accountants at the partner level or above in accounting firms and inactive accountants holding executive positions in companies.