Hankyung Research Institute "Slight Rebound in Corporate Sentiment... Recovery to Pre-COVID Levels"

[Asia Economy Reporter Su-yeon Woo] The economic uncertainty eased with the introduction of the novel coronavirus disease (COVID-19) vaccine, leading to a slight recovery in the perceived business conditions of domestic companies.

On the 26th, the Korea Economic Research Institute under the Federation of Korean Industries conducted a Business Survey Index on 600 companies, revealing that the comprehensive business outlook for February recorded 96.6, rising 4.9 points compared to the previous month. The business outlook showed a slight rebound as the third wave of COVID-19 entered a calming phase.

By industry, the perceived business conditions of non-manufacturing sectors, including services (98.8), increased by 11.9 points from the previous month, while manufacturing (94.9) fell by 0.3 points, remaining at the previous month's level. The Korea Economic Research Institute analyzed that in non-manufacturing, positive outlooks expanded mainly in construction (105.4) and wholesale and retail trade (102.3) due to improved consumer sentiment and increased business order expectations amid the calming of the third wave of COVID-19.

KERI Business Survey Index Trend for Overall Economy BSI / Data = KERI

On the other hand, manufacturing showed relative sluggishness partly due to seasonal factors such as reduced working days during the Lunar New Year holidays. However, key industries such as semiconductors and petrochemicals generally showed favorable outlooks, acting as a support pillar.

The outlooks for electronics and communication equipment (104.2), including semiconductors, and petrochemicals (103.3) exceeded the 100-point baseline for two consecutive months, while automobiles (91.2) rebounded, rising 13.8 points from the previous month. The Korea Economic Research Institute explained that the export boom and performance improvements in recent key items such as semiconductors, automobiles, and wireless communication devices contributed to companies' positive economic perceptions.

Looking at the outlook by sector, all sectors except inventory?domestic demand (93.4), exports (92.4), investment (96.3), employment (96.6), financial conditions (96.1), profitability (96.1), and inventory (99.5)?recorded below the baseline. The Korea Economic Research Institute noted that although investment and employment outlooks still remained below 100, they rose significantly compared to the previous month (investment up 7.0 points, employment up 6.5 points), recovering to pre-COVID-19 crisis levels. The institute analyzed that factors such as the inauguration of U.S. President Biden and expectations for vaccine commercialization eased uncertainties, somewhat improving corporate investment and employment sentiment.

The January performance index was 97.1, slightly up from the previous month but still below 100. By sector, all areas?domestic demand (95.3), exports (97.1), investment (92.1), employment (97.6), financial conditions (97.1), profitability (98.2), and inventory (101.3)?remained below the baseline, continuing the sluggish trend.

Choo Kwang-ho, Director of Economic Policy at the Korea Economic Research Institute, emphasized, "As domestic and international uncertainties ease somewhat, the business outlook is showing a positive trend centered on key industries," adding, "Active policy measures to revitalize corporate vitality are necessary to ensure that expectations for economic recovery lead to a definite rebound in the real economy."

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