Perceived Manufacturing Business Conditions in Gwangju Region Decline for Fourth Consecutive Quarter

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] The sentiment of manufacturing companies in the Gwangju region is expected to worsen further in the second quarter.

The Gwangju Chamber of Commerce and Industry (Chairman Jeong Chang-seon) announced on the 2nd that the '2020 Q2 Business Survey Index (BSI)' for 130 manufacturing companies in the Gwangju area showed a forecast of 64, down 15 points from the previous quarter (79).

The Business Survey Index (BSI) quantifies corporate sentiment; a value below the baseline (100) indicates that more companies expect the economy to worsen compared to the previous quarter, while a value above 100 means more companies anticipate improvement.

The manufacturing sector's sentiment has been declining for four consecutive quarters. Generally, the second quarter marks the end of winter and the start of economic recovery, but due to unresolved domestic and international economic challenges such as Japan's export restrictions and domestic demand contraction, compounded by the spread of COVID-19, the sentiment has further deteriorated.

Additionally, first-quarter performance also fell sharply by 29 points from the previous quarter (78) due to sluggish domestic demand and export declines, marking the lowest performance since the first quarter of 2009 (43) during the financial crisis.

By industry, most sectors showed poor sentiment, including 'Automotive Parts (71→72)', 'IT & Home Appliances (72→68)', and 'Chemicals, Rubber & Plastics (76→53)'. Only 'Glass, Cement & Concrete (17→117)' expected improved sentiment compared to the previous quarter, anticipating increased demand due to seasonal peak periods.

'Automotive Parts (71→72)' showed poor sentiment as the spread of COVID-19 led to domestic economic stagnation and reduced orders from clients. 'IT & Home Appliances (72→68)' forecasted negatively despite expected demand increases for major seasonal appliances like air conditioners and kimchi refrigerators, due to domestic and international economic contraction causing sales declines.

'Chemicals, Rubber & Plastics (76→53)' faced export slumps amid prolonged US-China trade disputes and COVID-19 spread. 'Steel & Metal Processing (74→53)' anticipated worsening conditions despite the end of the steel industry's off-season, due to investment contractions in downstream industries (construction, electronics, semiconductors) and domestic demand weakness.

'Machinery & Molds (95→53)' expected worsening sentiment due to deteriorating construction conditions and ongoing COVID-19-related domestic demand contraction. 'Food & Beverage (107→75)' also fell below the baseline (100) as domestic demand weakness prolonged.

By company size, both large enterprises (90→85) and small and medium enterprises (78→60) expected worsening conditions due to domestic demand weakness and overall economic downturn.

Among respondents, 40.0% of large enterprises reported that sentiment would 'worsen compared to the previous quarter,' the highest proportion, while 57.3% of small and medium enterprises shared this negative outlook.

By export scale, both export companies (120→64) and domestic companies (68→64) showed worsened economic outlooks compared to the previous quarter. Particularly, export companies experienced a significant decline due to economic contraction from COVID-19 spread and difficulties in customs clearance.

A Gwangju Chamber of Commerce official stated, "Although the second quarter is when major industries' business activities typically intensify, the spread of COVID-19 has deepened concerns about a global economic downturn, further worsening manufacturing companies' sentiment. Early resolution of COVID-19 and multifaceted efforts to improve consumption and investment sentiment are urgently needed, along with economic stimulus measures such as quantitative easing and early fiscal spending."

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