'COVID-19 4th Wave'... Corporate Sentiment Worsens Again After 5 Months

COVID-19 Resurgence and Raw Material Price Increase... BSI Declines
August, Business Sentiment Drops Sharply for Large, Small, Export, and Domestic Companies

[Asia Economy Reporter Jang Sehee] The Business Survey Index (BSI), which reflects companies' perceived business conditions, worsened again after five months due to the fourth wave of COVID-19. The manufacturing sector's sluggish performance is expected to continue amid rising raw material prices and disruptions in semiconductor and electronic component production.

According to the July BSI results announced by the Bank of Korea on the 30th, the overall industry business performance BSI stood at 87, down 1 point from the previous month. This marks the first decline in five months since February (76). The recent resurgence of COVID-19 has once again hindered recovery. The daily new COVID-19 cases recently recorded around 1,800.

The Business Survey Index represents the business sentiment felt by companies. A figure below 100 indicates that more companies view the business outlook pessimistically than optimistically.

The manufacturing sector BSI was 97, down 1 point from the previous month, marking a decline after four months. By industry, clothing and fur dropped sharply by 24 points due to weakened domestic demand. Rubber and plastics (7 points) and chemicals and chemical products (3 points) also declined.

By company size, large enterprises remained steady at 107, while small and medium-sized enterprises (SMEs) fell 3 points to 85. By company type, the BSI for export companies and domestic companies decreased by 2 points and 1 point, respectively.

Kim Daejin, head of the Corporate Statistics Team at the Economic Statistics Bureau, analyzed, "The overall industry BSI declined after five months due to the resurgence of COVID-19. Rising raw material prices also had some impact."

The non-manufacturing sector was hit harder by the COVID-19 resurgence than manufacturing, likely due to reduced face-to-face consumption amid strengthened social distancing measures.

The non-manufacturing sector BSI was 79, down 2 points from the previous month. By industry, business facility management, business support and rental services, and arts, sports, and leisure all dropped by 11 points. This was influenced by decreased visitors to golf courses and theme parks. Conversely, electricity, gas, and steam rose by 16 points due to increased summer power demand.

Companies forecast that difficulties in business activities will intensify in August as COVID-19 continues. The overall industry business outlook BSI for August was 84, down 6 points from the previous month. The manufacturing sector outlook BSI also fell 7 points to 92. Declines are expected mainly in metal processing (-13 points) and electronic, video, and communication equipment (-4 points).

The non-manufacturing sector outlook BSI dropped 4 points to 78, with a significant decrease expected in arts, sports, and leisure (-21 points).

By company size and type, declines were seen across the board: large enterprises (-3 points), SMEs (-12 points), export companies (-8 points), and domestic companies (-6 points).

Meanwhile, the Economic Sentiment Index (ESI), which encompasses both consumer and corporate sentiment, recorded 103.9, down 5.4 points from the previous month.

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