Expansion of Vaccinations Improves Business and Export Conditions... Self-Employed Still Struggling

[Asia Economy Reporter Su-yeon Woo] As global vaccination efforts expand, exports and corporate business conditions are improving, but it has been revealed that domestic self-employed individuals are still deeply troubled. While corporate sentiment is improving due to the recovery of export conditions and expectations for the 'With Corona' policy, the outlook for neighborhood businesses remains predominantly bleak.

According to the Business Survey Index (BSI) conducted by the Korea Economic Research Institute on the top 600 companies by sales, the comprehensive business BSI outlook for October was 103.4, exceeding the baseline (100) for the second consecutive month. A BSI above 100 is considered a positive economic outlook, while below 100 is negative. The Korea Economic Research Institute analyzed that the positive corporate sentiment in October was due to improved business sentiment in the non-manufacturing sector, driven by expectations for a phased return to normal life through 'With Corona.'

In particular, the non-manufacturing sector (106.9) outlook index was higher than that of manufacturing (101.0), showing a significant increase of 7.5 points compared to the previous month (September, 99.4). The Korea Economic Research Institute interpreted that the leisure, accommodation, and dining industry (125.0) showed strong positive momentum due to expectations for the easing of domestic social distancing measures, leading the overall industry index increase.

The export business outlook also continued to improve. The Korea International Trade Association’s International Trade and Commerce Research Institute surveyed 1,036 domestic export companies and reported that the '2021 4th Quarter Export Industry Business Outlook Index (EBSI)' recorded 106.0. Although the index slightly decreased compared to the 3rd quarter (113.5), it remained above the baseline (100) for six consecutive quarters.

By product category, as global demand recovery continued due to vaccine distribution, exports of 10 out of the 15 major items, including automobiles and automobile parts (143.4), medical, precision, and optical instruments (129.0), and machinery (111.5), were expected to increase. By item, export contracts (113.2), export consultations (111.8), and export country economies (109.5) were expected to improve, reflecting optimism about economic recovery in major countries and export revitalization due to COVID-19 vaccine distribution.

While export and corporate business outlooks are improving, perceptions among self-employed individuals remain negative due to partial easing of quarantine rules. According to the 'COVID-19 Quarantine Rules Awareness and Performance Outlook' survey conducted by the Federation of Korean Industries, despite some recent easing of quarantine guidelines, 85.9% of respondents said it did not help or change their business operations. Additionally, self-employed individuals continue to suffer and hold pessimistic views, expecting sales and net profits in the fourth quarter of this year to decrease by approximately 17-18% compared to the same period last year.

Self-employed people's perception of eased quarantine rules compared to before / Data = Federation of Korean Industries

Self-employed individuals also forecast negative business performance for the fourth quarter of this year amid growing concerns over the spread of the Delta variant. Compared to the fourth quarter of last year, which overlapped with the third wave of COVID-19 in Korea (November 2020 to January 2021) and caused significant damage, 78.5% of self-employed individuals expected sales to decline in the fourth quarter of this year, and 77.5% anticipated a decrease in net profits.

Yoo Hwan-ik, Director of Corporate Policy at the Federation of Korean Industries, emphasized, "As COVID-19 prolongs and social distancing levels 3 to 4 have been maintained for over two months recently, the damage and anxiety among self-employed individuals have reached their peak. When designing policies, it is necessary to communicate sufficiently with the livelihood field and prepare in a way that minimizes conflicts or shocks."

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