Certified Public Accountants View Q4 Korean Economy as 'Clear'... Improvement Slows in Q1 Next Year

[Asia Economy Reporter Ji Yeon-jin] A survey has revealed that the overall Korean economy is improving in the fourth quarter of this year. However, the economic improvement is expected to slow down in the first quarter of next year.

According to the 'CPA BSI Issue 12' published on the 28th by the Korean Institute of Certified Public Accountants, the Business Survey Index (CPA BSI) as seen by certified public accountants showed a current economic BSI of 122 for the fourth quarter of this year. The BSI uses 100 as the baseline; a value above 100 indicates economic improvement, while below 100 indicates economic deterioration. Since the fourth quarter BSI exceeds the baseline of 100, it indicates that the overall economy is improving.

Based on the current BSI for the fourth quarter, shipbuilding (142), textiles and apparel (138), finance (134), and information and communications (133) were selected as industries showing strong performance in the fourth quarter.

The current BSI rose continuously for four consecutive quarters from 30 in the second quarter of last year to 137 in the second quarter of this year, then briefly dipped to 118 in the third quarter before rebounding in the fourth quarter. However, the fourth quarter only saw a 4-point increase, indicating a slowdown in the rate of growth and suggesting that the economic improvement trend has plateaued.

The forecast BSI for the first quarter of next year is 118, marking a decline for two consecutive quarters following 122 in the fourth quarter. Although the forecast BSI dropped by -21 points in the fourth quarter, the decline is limited to -4 points for the first quarter of next year, showing a plateau in the forecast BSI similar to the current BSI.

The main factors expected to affect Korea's economy next year were the impact of COVID-19 (such as vaccination speed and improvement in consumer sentiment), accounting for 29%. This was followed by ▲global economic recovery speed (23%) ▲raw material prices and inflation (16%) ▲global supply chain bottlenecks (6%) ▲changes in financing environment (shift to tightening monetary policy including reduction of quantitative easing and interest rate hikes) (6%).

The survey was conducted from the 15th to the 24th of last month. The Institute of Certified Public Accountants stated, "Since the survey, the spread of the Omicron variant and the rapid increase in COVID-19 confirmed cases and critically ill patients have raised uncertainties about domestic demand recovery again, and inflation is emerging due to supply chain bottlenecks. We must be aware that these factors could act as downside risks to our economy."

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