SMEs "COVID-19 Leads to 'Worsening' Economic Outlook Next Month"

Korea Federation of SMEs March Small and Medium Business Outlook Survey

Source=Korea Federation of SMEs

[Asia Economy Reporter Moon Hyewon] As the novel coronavirus disease (hereinafter COVID-19) situation spreads, pessimism about the economy among domestic small and medium-sized enterprises (SMEs) has increased.

On the 26th, the Korea Federation of SMEs conducted a March business outlook survey for 3,150 SMEs this month. The Small and Medium Business Health Index (SBHI) for March business outlook was 78.5, down 8.1 points from the same month last year. This is 2.7 points lower than the previous month, marking a decline for three consecutive months.

A forecast index of 100 or below means that more companies expect the economy negatively than positively. This can be interpreted as SMEs having significant concerns about the economy next month.

In particular, the seasonally adjusted forecast (76.0) recorded the lowest level since the statistics began in February 2014. The delay in economic recovery and the impact of the COVID-19 situation caused a sharp decline in the indices of lifestyle service industries such as 'Accommodation and Food Services' and 'Educational Services.'

The March business outlook for manufacturing fell 3.3 points from the previous month to 79.6, and non-manufacturing fell 2.4 points to 77.9. Construction rose 7.3 points, showing expectations for the economy ahead, but the service sector plunged 4.4 points.

Looking at the outlook by industry category across all industries, except for export outlook (85.6→86.9), domestic sales (80.3→77.9), operating profit (78.5→74.0), and financial conditions (78.7→73.2) all declined compared to the previous month. Employment level (97.0→99.2) rose, indicating that employment conditions are expected to worsen somewhat.

The management difficulties faced by SMEs this month were ▲ sluggish domestic demand (68.1%) ▲ rising labor costs (48.4%) ▲ excessive competition among companies (41.1%) ▲ delayed collection of sales payments (18.8%) in order.

Looking at the trend of management difficulties for SMEs over the past four years, the biggest difficulty, sluggish domestic demand (64.3→68.1), slightly rebounded this month, but the response rates for rising labor costs (51.9→48.4), excessive competition among companies (43.3→41.1), delayed collection of sales payments (20.0→18.8), and rising raw material prices (18.1→17.5) decreased. It is interpreted that the economy perceived by SMEs has worsened further due to sluggish domestic demand.

This content was produced with the assistance of AI translation services.