Gwangyang Chamber of Commerce, Q2 Regional Business Outlook Index at 96.8

Management Risk Factors.. Rising Oil and Raw Material Prices and Corporate Burden Bills

Creating a Business-Friendly Management Environment Cited as a Priority for the Next Government

[Gwangyang=Asia Economy Honam Reporting Headquarters, Reporter Heo Seonsik] The Gwangyang Chamber of Commerce and Industry in Jeonnam (Chairman Lee Baek-gu) announced that the business outlook index was calculated at 96.8 in the "2022 2nd Quarter Business Outlook Survey" conducted from February 21 to March 7 (10 days excluding holidays) targeting about 100 local companies.

Among the total respondents, 22.6% of companies expected improvement compared to the previous quarter, 51.6% responded that it would be similar to the previous quarter, and 25.8% expected a deterioration in business conditions.

The top domestic and international risk factor expected to affect management in the 2nd quarter was "increase in production costs due to rising oil and raw material prices" (27.6%), followed by "implementation of corporate burden laws such as the Serious Accident Punishment Act" (20%), "domestic demand slump due to the prolonged impact of COVID-19" (18.2%), "increase in interest expenses due to the domestic interest rate hike trend" (9.4%), "burden of responding to environmental issues such as carbon emission reduction" (7.6%), "increased management uncertainty due to intensified exchange rate fluctuations" (6.5%), "production disruption due to global supply chain issues" (4.7%), "worsening export difficulties due to deteriorating international relations" (4.7%), and others (1.3%).

As global inflation caused a sharp rise in international oil and raw material prices, resulting in a trade deficit, the situation of local companies was reported as "no particular impact" (45.2%), "maintaining operating profit but decreased compared to before" (37%), "turned to operating loss" (14.5%), and "turned to operating profit" (3.3%).

Companies that "turned to operating loss" or "maintained operating profit but decreased in scale" responded with "efforts to reduce production costs (reducing personnel, expenses, marketing, etc.)" (65%), "reflecting increased costs in product prices" (23.3%), "finding alternative import sources" (4.7%), and "no special countermeasures" (7%) in that order.

A representative of the Gwangyang Chamber of Commerce and Industry said, "Amid concerns over global inflation, with the US Federal Reserve’s full-scale interest rate hikes and the Bank of Korea’s additional base rate hikes becoming a foregone conclusion, it is difficult to expect the domestic economy maintained by fiscal effects, so exports must lead economic growth. However, uncertainties are increasing due to US-China trade conflicts, the Russia-Ukraine war-triggered global supply chain issues, and rising international oil and raw material prices, presenting a tougher challenge than ever."

He added, "Since the newly launched government prioritizes private-led growth, it should first focus on 'creating a business-friendly management environment such as deregulation' and 'improving labor-related systems that have constrained companies until now.'"

The Business Survey Index (BSI) quantifies the on-site business sentiment of companies and is expressed between 0 and 200. A value above 100 means more companies expect the business conditions to improve compared to the previous quarter, while below 100 means more expect deterioration.

Gwangyang=Asia Economy Honam Reporting Headquarters, Reporter Heo Seonsik hss79@asiae.co.kr

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