Accountants Say "Overall Improvement in Domestic Economy in Q3 This Year"

[Asia Economy Reporter Park Ji-hwan] Certified public accountants (CPAs) evaluated that the overall economy improved in the third quarter of this year. However, they judged that the economic recovery trend has somewhat slowed down after peaking in the second quarter.

According to the CPA Business Survey Index (CPA BSI) released by the Korean Institute of Certified Public Accountants (KICPA) on the 29th, the economic status BSI for the third quarter of this year, as assessed by accountants, was 118. A BSI above 100 indicates economic improvement, while below 100 indicates economic deterioration.

However, due to the resurgence of COVID-19 and the implementation of Level 4 social distancing, domestic demand recovery stalled, causing the third quarter BSI to drop by 19 points compared to the previous quarter. This means the economic recovery trend has somewhat slowed since peaking in the second quarter.

KICPA conducted a survey from September 9 to 23 targeting 257 certified public accountants regarding the overall Korean economy and the economic conditions of major industries.

The outlook for the fourth quarter was 122, down 21 points from the previous quarter. KICPA explained, "With the recent phased return to normal life and the visible transition of the quarantine system, the consumption sentiment contraction caused by COVID-19 is expected to gradually improve." However, concerns over rising consumer prices persist, so uncertainty about domestic demand recovery remains high.

Accountants identified the detailed factors that could affect Korea's economy this year as follows: △ Impact of COVID-19 (speed of vaccination and improvement in consumer sentiment, etc.) (41%) △ Speed of global economic recovery (23%) △ Government's expansionary fiscal policy (9%) △ Improvement in corporate investment sentiment (6%) △ Changes in funding environment (shift to tightening monetary policy such as reduction of quantitative easing and interest rate hikes) (6%).

By industry, the current (third quarter) and outlook (fourth quarter) BSI for all industries exceeded 100 but declined compared to the previous quarter. The slowdown in business improvement trends is appearing across industries. The third quarter BSI decline was particularly large in industries relatively dependent on domestic demand, such as textiles and apparel (-35 points), distribution (-25 points), and food and beverages (-24 points).

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