47% of SMEs Expect Business Performance to Decline Compared to Last Year This Year

Junggi Research Institute Announces 2021 Small and Medium Business Outlook Survey Results

[Asia Economy Reporter Kim Cheol-hyun] A survey revealed that 47% of small and medium-sized enterprises (SMEs) expect their business performance this year to decline compared to last year, which was affected by the novel coronavirus infection (COVID-19). On the 10th, the Korea Small Business Institute (President Lee Byung-heon) announced this through the report titled '2021 SME Business Outlook and Policy Tasks.'

According to the report, despite the base effect from last year's poor business performance, SMEs forecast decreases in sales, investment, and employment for 2021. In particular, 46.9% of SMEs expected their sales this year to decrease compared to the previous year, which was more than three times the 13.4% who anticipated an increase. This analysis is based on a survey conducted from December 4 to 16 last year targeting 522 SMEs with five or more employees.

The expected recovery time for the economic crisis caused by COVID-19 among SMEs appears to be delayed. 43.1% of SMEs anticipated that the economic crisis due to COVID-19 would recover this year. This figure is 10.5 percentage points lower than the survey results from May last year. There were no responses indicating that the economic crisis had recovered in the second half of last year. The proportion of respondents who believed the economic crisis would not recover for the time being was high at 33.0%.

7.1% of SMEs reported having considered closing their business after COVID-19. By business age, startups less than 7 years old (12.5%) had a higher proportion than general companies over 7 years old (7.0%). By employee size, the order from highest to lowest was 5?9 employees (9.6%), 10?49 employees (6.4%), and 50 or more employees (2.0%).

No Min-seon, head of the Future Strategy Research Group at the Korea Small Business Institute, stated, "This year, our economy may see a deepening polarization among SMEs due to K-shaped growth," emphasizing, "It is necessary to promote SME support policies by distinguishing between general SMEs and innovative SMEs through a two-track approach." No added, "To respond to the COVID-19 crisis, financial support for SMEs must continue," suggesting digitalization, business restructuring and industry conversion, and merger and acquisition support as key policy tasks to enhance SME resilience.

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