Junggyeonryeon Announces Results of '2022 Q3 Mid-sized Companies Economic Outlook Survey'
[Asia Economy Reporter Kim Cheol-hyun] Due to concerns over global high inflation and high interest rates, the economic outlook for mid-sized companies in the third quarter showed only a slight increase compared to the previous quarter.
The Korea Federation of Mid-sized Enterprises announced on the 30th in its '2022 Q3 Mid-sized Enterprises Economic Outlook Survey' that the economic outlook index for Q3 2022 rose by 3.1 points from the previous quarter to 100.6. This survey was conducted from May 30 to June 14, targeting 620 mid-sized companies. An index above 100 means more companies have a positive outlook for the next quarter compared to the previous one, while below 100 indicates the opposite.
The manufacturing sector's economic outlook index, which rose 4.9 points in Q2, recorded a slight increase of 0.8 points to 100.0, despite rises in some industries such as food and beverages. The primary metals sector index, which recorded the second-highest figure (105.0) since the survey began in Q2, fell 9.2 points from the previous quarter to 95.8.
The electronic components sector index, which has recorded above 100 for nine consecutive quarters, rose by 3.0 points, the same as in Q2, but the automobile and trailer sector increased from 6.6 points in Q2 to only 1.3 points, and the chemical sector's increase slowed from 14.1 points to 2.6 points.
The non-manufacturing sector's economic outlook index rose 4.6 points from the previous quarter to 101.2. In particular, with the recovery of daily life following the lifting of social distancing measures, positive outlooks expanded among companies related to intercity bus transportation and highway operations, causing the transportation sector index (106.5) to rise sharply by 15.1 points.
Expectations for export growth also declined. Due to worsening export conditions such as rising raw material and logistics costs and increased exchange rate volatility, the export outlook index fell 5.3 points from the previous quarter to 100.4. The chemical and automobile sectors saw double-digit declines. The chemical sector's export outlook index, which maintained above 100 for two consecutive quarters, dropped 11.9 points to 98.1. As supply difficulties for automotive semiconductors persist, negative outlooks have expanded among mid-sized companies related to future vehicles such as electric cars, hydrogen cars, and autonomous driving, with the automobile sector index (98.6) falling 10.2 points.
The domestic demand outlook index was confirmed at 101.5, but the increase was minimal at 1.4 points. The non-manufacturing sector (101.3) rose by 1.9 points, but the manufacturing sector (101.6) increased by only 0.2 points.
The operating profit outlook index, which rose 4.6 points in Q2, fell to 95.7 as both manufacturing and non-manufacturing sectors declined. Except for the electronic components sector (101.4) in manufacturing and the transportation sector (101.6) in non-manufacturing, all other sectors showed negative outlooks (below 100).
The financial condition outlook index recorded 97.7, increasing by only 1.2 points despite significant rises in the transportation and food and beverage sectors, reflecting growing concerns in the industry. Due to spreading concerns over economic recession, the primary metals sector's financial condition outlook index recorded the largest decline across both manufacturing and non-manufacturing sectors, mainly among companies supplying finished vehicles.
The facility investment outlook index for manufacturing mid-sized companies was positive in all sectors except automobile and chemical, rising 2.9 points from the previous quarter to 100.4.
The main management difficulties for mid-sized companies were rising raw material prices (43.1%) and rising labor costs (38.2%). In the manufacturing sector, rising raw material prices (58.2%) were the biggest challenge, while in the non-manufacturing sector, rising labor costs (43.5%) were identified as the greatest difficulty.
Choi Hee-moon, Executive Director of the Korea Federation of Mid-sized Enterprises, emphasized, "To prevent concerns about high interest rates, high inflation, and high exchange rates?clearly confirmed in the field?from materializing into economic recession and reduced corporate vitality, we must accelerate extraordinary policy support to resolve specific difficulties such as rising raw material prices and labor costs."
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