Next January SME Business Outlook at 79.0... Falls Below 80 Due to Omicron Impact

Korea Federation of SMEs Announces Mid-Term Economic Outlook Survey Results
Service Sector Outlook Deteriorates Including Accommodation and Food Services
Top Concern for SMEs: Domestic Demand Slump

[Asia Economy Reporter Kim Bo-kyung] Due to the resurgence of COVID-19, the Small and Medium Enterprise (SME) Business Outlook Index for January next year recorded 79.0, down 4.5 points from the previous month.

The Korea Federation of SMEs announced on the 26th the results of the 'January 2022 SME Business Outlook Survey' conducted from the 13th to the 20th, targeting 3,150 SMEs.

The Business Outlook Index (SBHI) for January fell 4.5 points from the previous month to 79.0. This is the first time in four months since last September (78.0) that the index has dropped below 80.

The Federation explained, "The rapid increase in COVID-19 cases due to the spread of the Omicron variant and the strengthening of social distancing measures" negatively affected the overall industry sentiment, especially in accommodation and food service sectors.

The manufacturing sector's business outlook for January was 83.3, down 3.1 points from the previous month, while the non-manufacturing sector dropped 5.2 points to 76.8. Construction (74.3) fell 8.0 points, and services (77.3) decreased by 4.6 points compared to the previous month.

In particular, within the service sector, all 10 industries declined, centered on accommodation and food services (78.2→47.2) and arts, sports, and leisure-related services (70.1→55.1), which are expected to be affected by the strengthened social distancing measures.

Exports outlook rose slightly (90.1→91.1), and employment outlook, which has been on a counter-trend, is also expected to improve slightly (94.5→94.4). However, domestic demand (83.4→79.3), operating profit (79.3→76.0), and financial conditions (79.2→76.8) outlooks declined compared to the previous month.

The main difficulties faced by SMEs in December were dominated by sluggish domestic demand (58.3%), followed by rising raw material prices (46.4%), increased labor costs (44.9%), and excessive competition among companies (40.1%).

Meanwhile, the average operating rate of small and medium manufacturing firms in November was 72.0%, up 0.5 percentage points from the previous month and 1.8 percentage points from the same month last year.

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