Hankyung Research Institute "Companies Expect Economic Recovery to Slow in September... Bold Policies Needed"

[Asia Economy Reporter Ki-min Lee] The Korea Economic Research Institute (KERI) announced on the 27th that the Business Survey Index (BSI) outlook for September rose by 1.9 points from 81.6 in August to 83.5. Compared to the 7.9-point increase in August from July, the recovery trend has slowed down.

A BSI above the baseline of 100 means positive responses outnumber negative ones, while a BSI below 100 indicates more negative responses.

The September sectoral outlooks were below the baseline across all sectors: domestic demand (88.0), exports (88.5), investment (84.6), funds (90.8), inventory (101.7), employment (86.6), and profitability (92.7).

Typically, September sees a more optimistic economic outlook than August, the vacation season, due to expectations of increased domestic demand during the Chuseok holiday. However, KERI explained that this year, negative outlooks dominate.

The actual figure for August was 79.8, marking the lowest in 19 years for the same month. It fell by 4.4 points compared to July and has remained below the baseline for 64 consecutive months.

Manufacturing domestic demand (90.5) and export (89.6) outlooks rose by 11.0 points and 10.6 points respectively from the previous month, but investment (81.1) decreased by 1.0 point, and employment (86.6) only rose by 0.4 points. In particular, the outlook for the semiconductor and electronic and telecommunications equipment sectors dropped by 8.4 points compared to the previous month.

KERI stated that the DXI index (DRAM eXchange Index), an indicator of the semiconductor industry, has continued to decline in the second half of the year, causing significant concern among domestic semiconductor companies.

KERI also pointed out that while manufacturing domestic demand and export outlooks have somewhat improved, investment and employment outlooks have stagnated. They analyzed that despite improvements in domestic demand and export outlooks, investment and employment have not followed due to increased economic uncertainty caused by COVID-19 and the US-China conflict, leading companies to delay investment and hiring.

Choo Kwang-ho, Director of Economic Policy at KERI, said, "Although the outlooks for domestic demand and exports, centered on manufacturing, have somewhat improved, the base effect due to seasonal factors is significant. With the resurgence of COVID-19 and intensifying US-China conflicts, uncertainties have expanded, leaving investment and employment outlooks still unclear."

He added, "It is important to revive the spark of economic recovery through bold policy support that can offset these uncertainties."

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