Hankyung Research Institute: "Export and Manufacturing Crisis Intensifies... Support Measures Must Be Implemented Promptly"

May BSI Outlook at 61.8, Continuing COVID Impact Following Previous Month (59.3)

[Asia Economy Reporter Ki-min Lee] As the impact of the novel coronavirus infection (COVID-19) continues, concerns among companies are growing that the crisis in exports and manufacturing industries will deepen.

According to a survey on the Business Survey Index (BSI) conducted by the Korea Economic Research Institute targeting the top 600 companies by sales, the May outlook recorded 61.8. Although this is a slight increase from last month's (59.3), which was the lowest since the global financial crisis, it still remains around the 60 mark.

By sector in the May outlook, all sectors except inventory recorded below the baseline: domestic demand (67.5), exports (65.0), investment (70.6), funds (77.6), inventory (97.5), employment (73.9), and profitability (72.5).

In particular, exports hit the lowest level since the BSI began in 1980. This appears to reflect companies' concerns that export sluggishness will worsen. Production disruptions due to shutdowns of major overseas factories, along with the spread of COVID-19 in key export countries such as the United States, Japan, and Europe, have led to a decrease in local demand as well.

By industry outlook, the lowest were automobile (30.8), travel and entertainment services (37.5), electronics and telecommunications equipment manufacturing (45.5), clothing and footwear manufacturing (53.8), and publishing and records (54.5). The automobile sector recorded a historic low (30.8) as the sharp decline in exports led to poor sales for finished car manufacturers, which in turn caused a decrease in sales for their suppliers. Exports of the five domestic finished car manufacturers are expected to decrease by 43.1% in April following a sluggish first quarter, and this trend is expected to continue in May.

The April actual figure was 58.8, down further from last month's (65.5). This marks five consecutive months of decline since recording 90.7 in November last year. By sector, all sectors except inventory showed below baseline: domestic demand (68.1), exports (67.8), investment (71.1), funds (75.9), inventory (96.4), employment (73.1), and profitability (69.5).

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, said, "The export and manufacturing crisis, which had somewhat held up in the first quarter, has become full-fledged since April, and the difficulties of key industries are expected to increase further. Since the downturn in key industries has a large ripple effect on related upstream and downstream industries and significantly impacts the already difficult employment market, active support measures such as liquidity support for the industries in crisis must be promptly implemented."

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