Hong Nam-ki: "Both Consumers and Businesses Contracting... 4th Wave of COVID-19 Spread a Risk Factor in Second Half"

COVID-19 Resurgence and Raw Material Price Increase... BSI Declines
In August, Business Sentiment Plummets for Large Corporations, SMEs, Exporters, and Domestic Companies

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is attending the Central Disaster and Safety Countermeasures Headquarters (CDSCH) meeting for COVID-19 response held at the Government Seoul Office in Jongno-gu, Seoul on the 30th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated, "The fourth wave of COVID-19, which began in early July, is expected to have ripple effects on the economy in the second half of the year, especially in the third quarter, making it a significant risk factor for economic management in the latter half of the year."

On the 30th, Hong posted on his social media (SNS), "Looking at the psychological indicators, the Consumer Sentiment Index (CSI) for July fell by 7.1 points to 103.2, and the Manufacturing Business Survey Index (BSI) for July dropped by 1 point to 97. This reflects concerns about the economic impact of the COVID-19 spread on both export and domestic companies."

He added, "The Economic Sentiment Index (ESI), which combines the CSI and BSI, also fell by 5.4 points to 103.9, confirming the possibility of an expanded ripple effect from the fourth wave."

The Business Survey Index (BSI), which indicates companies' perceived business conditions, declined for the first time in five months. According to the July BSI results released by the Bank of Korea on the same day, the BSI for overall industrial business conditions was 87, down 1 point from the previous month. The overall industry BSI had risen from 83 in March to 88 in April and remained steady until June.

He expressed, "Although the impact on real indicators such as July exports and total card sales is not yet clearly visible, it is regrettable to see both consumers and companies somewhat psychologically restrained. The key is to control the fourth wave early as soon as possible."

He continued, "The government will make every effort to minimize economic impact under thorough quarantine efforts, swiftly support those affected, and mobilize comprehensive policy capabilities in the third quarter to sustain a fast and strong economic recovery."

Meanwhile, regarding the industrial activity trends announced on the same day for June, he evaluated, "It confirmed that the growth path anticipated in the second half economic policy direction has been maintained." Statistics Korea announced that the overall industrial production index rose by 1.6% compared to the previous month last month.

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