Accountants Say "Economic Slump Will Continue Into Fourth Quarter"

Economic Downturn 51% > Improvement 8%
"Economic Shock Increases if COVID-19 Resurges"

[Asia Economy Reporter Minji Lee] Accountants predicted that the economic downturn caused by the novel coronavirus infection (COVID-19) will continue into the fourth quarter.

According to ‘CPA BSI Vol’ 7 published by the Korean Institute of Certified Public Accountants on the 26th, the Business Survey Index (CPA BSI) for the third quarter as seen by certified public accountants was 57. Although it rebounded from the second quarter BSI (30) conducted in April when the COVID-19 shock was at its peak, it still did not reach the first quarter BSI (62). A BSI value above 100 indicates that there are many positive economic outlooks. This survey was conducted over five days from the 20th to the 24th of last month targeting 321 certified public accountants, with an overall response rate of 49%.

The proportion of accountants who responded that the economy had worsened was 51%, higher than the 8% who responded that it had improved. Most respondents anticipated a sluggish economy in the third quarter. The BSI forecast for the fourth quarter was 74. The proportion of respondents who expected the economy to worsen in the fourth quarter (43%) was higher than those who expected improvement (17%), indicating that the economy is expected to remain sluggish in the fourth quarter as well.

The main factors cited were △ external environmental uncertainty △ sluggish exports △ domestic demand recession. A representative from the Korean Institute of Certified Public Accountants stated, “The fact that respondents consider external environmental uncertainty as the top priority factor when judging the economy indicates that if uncertainty expands due to the resurgence of COVID-19, the BSI may fluctuate sharply in the future.”

Accountants identified detailed factors affecting the domestic economy this year as △ economic slowdown due to COVID-19, the rise of protectionism, financial market instability △ the government’s expansionary fiscal policy △ domestic and international political uncertainty △ whether corporate investment sentiment improves.

By industry, the business conditions of all industries improved compared to the previous quarter, which was directly hit by COVID-19. The pharmaceutical & bio, information & communication, food & beverage, and electronics industries reflected the external environmental uncertainty caused by COVID-19 in a positive direction. However, the steel, automobile, petroleum, and machinery industries recorded low indices.

Since its first publication in June 2018, the CPA BSI released by the Korean Institute of Certified Public Accountants has been evaluated as a proactive predictor of the economy.

This issue focused on ‘The World After COVID-19’ and deeply covered the social and economic changes brought about by COVID-19. It included special contributions such as △ ‘10 Major Changes Brought by COVID-19’ (Maeil Business Newspaper Editorial Advisor Sehyung Kim) △ ‘The Impact of COVID-19 on Audit’ (Professor Jonghak Choi, Seoul National University Business School, and Deputy CEO Janghoon Shin, Samjong Accounting Corporation), as well as two articles written by experts from accounting firms.

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