Gwangyang Region Companies' Business Outlook Index for Q2 2021 at 83.9

51.8% of Companies Experienced Decreased Sales and 57.1% Experienced Decreased Operating Profit in Q1

[Asia Economy Honam Reporting Headquarters, Reporter Heo Seon-sik] The Gwangyang Chamber of Commerce and Industry in Jeonnam (Chairman Lee Baek-gu) announced on the 29th that, according to the ‘2021 2nd Quarter Business Outlook Survey’ conducted on about 100 local companies, 51.8% of companies experienced a decrease in sales in the 1st quarter, 57.1% saw a decline in operating profit, and 67.3% reported that last year’s performance (operating profit) was lower compared to the pre-COVID period.

The ‘2021 2nd Quarter Business Survey Index (BSI)’ was recorded at 83.9.

This figure represents a 16.1-point increase from the previous quarter’s 67.8, marking the second consecutive quarter of positive outlook. However, the proportion of companies expecting deterioration (35.7%) remains higher than those expecting improvement (19.6%), reflecting concerns over uncertain business conditions alongside expectations that the lowest point has passed.

The Business Survey Index (BSI) quantifies companies’ on-site economic sentiment on a scale from 0 to 200. A score above 100 indicates that more companies expect the business climate to improve compared to the previous quarter, while a score below 100 indicates expectations of deterioration.

According to the survey results, the biggest external risk expected to impact businesses this year was ‘Protectionism including US-China trade conflicts (33.7%)’, followed by ‘Rising oil prices (23.5%)’, and ‘Emerging market recessions and exchange rate volatility (each 14.8%)’. Other risks accounted for 12.3%, and North Korea-related issues were 1.2%.

Regarding changes brought by COVID-19 to the economy, industry, and society, respondents cited ▲ the speed of the domestic 4th Industrial Revolution and digital transformation, ▲ the technology gap between advanced countries and Korean companies, ▲ the pace of technological catch-up by emerging countries such as China, and ▲ the degree of domestic income polarization.

Last year’s performance (operating profit) compared to the pre-COVID period was reported as decreased (67.3%), similar (25.5%), and increased (7.3%). The decrease ranges were: -5% to -10% at 23.1%, -11% to -20% at 11.5%, -21% to -30% at 6.4%, -31% to -40% at 2.6%, and over -50% accounted for 6.4%.

Assuming no resurgence of COVID-19, 76.9% of respondents expected recovery to pre-COVID levels to occur after next year. Recovery within this year was expected by 23.1%, and no recovery during the first half of the year was reported.

A representative of the Gwangyang Chamber of Commerce and Industry stated, “Although COVID-19 vaccinations have begun, concerns about re-spreading and a time lag with economic recovery mean uncertainty still prevails. Companies are facing increasing difficulties due to rapid changes in the business environment such as the expansion of non-face-to-face activities and acceleration of the 4th Industrial Revolution.”

He added, “While the US Federal Reserve (Fed) and the Bank of Korea have dismissed the possibility of interest rate hikes, advanced countries are hesitant to pursue aggressive monetary policies due to concerns about the aftereffects of tightening, whereas emerging countries are raising policy rates one after another. The decoupling of monetary policies could bring new crises to the global economy, requiring appropriate responses.”

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