January BSI 84.6... Drop of 12.7 Points
Largest Decline in 4 Years and 9 Months Since COVID-19
Manufacturing (84.2) and Non-Manufacturing (84.9) Both Slump
As the economic crisis continues with recession and high inflation, the domestic companies' economic outlook has shown negative figures for nearly three years, indicating a prolonged downturn.
According to a survey on the Business Survey Index (BSI) conducted by the Korea Economic Association (HanKyungHyup) targeting the top 600 companies by sales, the BSI forecast for January next year recorded 84.6. Since April 2022 (99.1), it has fallen below the baseline of 100 for 2 years and 10 months consecutively. This is the longest continuous period of decline since the survey began in January 1975. A BSI above 100 indicates a positive economic outlook compared to the previous month, while a BSI below 100 indicates a negative economic outlook compared to the previous month.
The drop in the January BSI forecast (84.6) was also notable. It fell by 12.7 points compared to December this year (97.3), marking the largest decline in 4 years and 9 months since April 2020 (25.1 points), when COVID-19 first intensified.
By industry, the economic outlook for January is expected to show simultaneous downturns in manufacturing (84.2) and non-manufacturing (84.9). The manufacturing BSI has remained below the baseline of 100 for 10 consecutive months since April (98.4), after exceeding 100 in March this year (100.5). The non-manufacturing BSI (84.9), which showed a positive outlook (105.1) last month, plunged by 20.2 points compared to the previous month, falling significantly below the baseline of 100 in just one month.
Among the 10 detailed manufacturing sectors, only Electronics and Communication Equipment (105.3) showed a favorable outlook. Except for Pharmaceuticals (100.0), which hovered around the baseline of 100, the other eight sectors are expected to experience worsening business conditions. Among the seven detailed non-manufacturing sectors, only Transportation and Warehousing (103.8) showed a favorable outlook. Except for Electricity, Gas, and Water Supply (100) and Leisure, Accommodation, and Food Services (100), which hovered around the baseline of 100, the other four sectors are expected to face deteriorating business conditions. HanKyungHyup expects an improvement in corporate sentiment in the non-manufacturing sector, centered on transportation and warehousing, where direct demand is expected to increase at the end and beginning of the year.
The BSI by sector surveyed in January showed negative outlooks across all sectors. Domestic demand (88.6), exports (90.2), and investment (89.4) have all been in decline for seven consecutive months since July 2024. In particular, the domestic demand BSI (88.6) recorded its lowest level in 52 months since September 2020 (88.0), and the export BSI (90.2) recorded its lowest level in 51 months since October 2020 (90.2), showing record negative outlooks for both domestic demand and exports. The investment BSI (89.4) is the lowest in 21 months since April 2023 (88.6).
Lee Sang-ho, head of the Economic and Industrial Division at HanKyungHyup, stated, "Along with changes in the external business environment such as the new Trump administration, domestic political uncertainty is intensifying, raising concerns about increased exchange rate volatility and prolonged domestic demand slump." He added, "Efforts to stabilize the exchange rate and support to revive industrial vitality must be thoroughly pursued to save the economy, and legislative discussions that exacerbate management uncertainty should be avoided."
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