BSI at 94.8... Remains Below Baseline for 3 Years and 8 Months
Manufacturing and Non-Manufacturing Sectors Sluggish for 4 Consecutive Months
Non-Manufacturing Drops 3 Points from Previous Month Due to High Exchange Rates
Domestic Demand, Investment, and Exports Worsen for 17 Consecutive Months
"Stabilizing Foreign Exchange and Diversifying Supply Chains Needed to Reduce Uncertainty"
The Business Survey Index (BSI), which provides insights into the economic climate as perceived by Korean companies through their future outlook, has remained below the baseline of 100 for 3 years and 8 months.
The Korea Economic Research Institute (KERI) announced on the 28th that, based on a BSI survey of the top 600 companies by sales, the BSI outlook for November this year recorded 94.8.
The BSI uses 100 as its baseline: a reading above 100 indicates a more positive outlook compared to the previous month, while a reading below 100 suggests a more negative outlook. Since recording 99.1 in April 2022, the BSI outlook has failed to exceed 100 for 3 years and 8 consecutive months, including the latest November survey. Not only the outlook but also the actual BSI figure was 91.1 this month, showing a sluggish trend for 3 years and 9 months since it recorded 91.5 in February 2022. These results indicate that companies overall have a pessimistic view of the current economic situation in Korea.
By industry, both manufacturing (96.8) and non-manufacturing (92.8) sectors remained below the baseline of 100 for the fourth consecutive month. The manufacturing BSI (96.8) has stayed below 100 for 1 year and 8 months since April last year, while the non-manufacturing BSI (92.8) has been below 100 for 4 consecutive months since August. KERI explained that while the manufacturing BSI showed a similar trend to October (96.8), the non-manufacturing BSI (92.8) dropped by 3.0 points from the previous month, leading to an overall decline in business sentiment.
Among the 10 detailed manufacturing sectors, general and precision machinery and equipment (120.0), as well as textiles, apparel, leather, and footwear (107.1), showed strong performance. Apart from food, beverages, and tobacco (100.0), and automobiles, ships, and other transportation equipment (100.0), which were at the baseline, the outlook for the remaining six sectors, including pharmaceuticals (75.0), was predominantly negative.
Among the 7 detailed non-manufacturing sectors, information and communications (112.5), professional, scientific, technical, and business support services (106.7), and electricity, gas, and water supply (105.3) were expected to perform well. The remaining four sectors, including transportation and warehousing (80.8), were expected to underperform. KERI analyzed that factors such as rising import prices due to a sharp increase in exchange rates, weakened consumer sentiment, and the end of the October holiday season have contributed to the sluggishness in non-manufacturing sectors.
In the October survey, all BSI components, including domestic demand (97.6), exports (94.2), and investment (91.6), continued to show negative outlooks. This overall sluggishness across all sectors has persisted for 1 year and 5 months since July last year.
Lee Sangho, Head of the Economic and Industrial Division at KERI, emphasized, "Increased foreign exchange volatility and instability in external supply chains are exacerbating difficulties for Korean companies," adding, "It is necessary to stabilize business sentiment through efforts to stabilize the value of the won, diversify supply chains, and resolve trade risks."
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