Is the Business Climate Recovering? July BSI Rises for 3 Consecutive Months

Bank of Korea 'July 2020 Corporate Business Survey Index (BSI) and Economic Sentiment Index (ESI)'

[Asia Economy Reporter Kim Eun-byeol] The corporate business sentiment, which had been contracted due to the impact of the novel coronavirus infection (COVID-19), showed improvement for three consecutive months. The manufacturing industry sentiment, which rebounded last month after five months, also recovered for two consecutive months.

According to the 'July 2020 Corporate Business Survey Index (BSI) and Economic Sentiment Index (ESI)' announced by the Bank of Korea on the 30th, the all-industry BSI this month recorded 60, rising 4 points from the previous month. The all-industry BSI steadily increased after falling to 51 in April.

The manufacturing industry, which was particularly hit hard by COVID-19, is also on a recovery trend. The manufacturing business condition BSI rose 6 points from the previous month to 57 this month. The manufacturing BSI had steadily declined since January, dropping to 49 in May, but has since rebounded and is rising.

Lee Seong-ho, head of the Financial Statistics Department at the Bank of Korea's Economic Statistics Bureau, said, "There was an impact from the recovery in automobile parts sales and improvement in the spread of some chemical products," adding, "The increase in semiconductor-related electronic parts sales was also a factor that raised the manufacturing business condition BSI."

However, although corporate business sentiment is recovering, the absolute figures remain low, indicating that many companies have a negative outlook. The BSI is an index that surveys business owners' judgments and forecasts on their current business conditions; if the number of respondents with a negative view exceeds those with a positive view, the index falls below 100. The lower the figure, the worse the corporate business sentiment.

Looking at manufacturing by company size, large enterprises (66) and small and medium enterprises (49) rose by 8 points and 4 points, respectively. By company type, export companies (67) increased by 8 points, and domestic companies (52) rose by 5 points. Export companies refer to those whose export amount accounts for 50% or more of total sales.

The non-manufacturing business condition BSI also recovered for three consecutive months. The non-manufacturing business condition BSI in July was 62, up 2 points from the previous month.

Lee said, "It is clear that corporate business sentiment is recovering," but added, "Among manufacturing, sectors such as petrochemicals and automobiles, which hold a large share in Korea, are still low, and in the non-manufacturing sector, wholesale and retail, transportation, and accommodation are performing very poorly."

Meanwhile, the Economic Sentiment Index (ESI), calculated by combining the corporate sentiment index and the consumer sentiment index, recorded 69.5, up 6.4 points from the previous month. The seasonally adjusted and irregular component-removed ESI cyclical component fell 2.6 points from the previous month to 60.3. This survey was conducted from July 15 to 22 targeting 3,696 corporate entities nationwide, with 3,080 companies responding.

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