Manufacturing Industry in Daejeon Region Forecasts 'Clear' Business Sentiment for Q2

Graph showing the trend changes of the Business Survey Index from Q3 2019 to Q2 2022. Provided by Daejeon Chamber of Commerce and Industry.

[Asia Economy (Daejeon) Reporter Jeong Il-woong] The manufacturing industry in the Daejeon region is looking positively on the business sentiment for the second quarter of this year. This reflects expectations that the business sentiment will improve compared to the previous quarter, as export momentum continues and quarantine regulations are eased.

On the 31st, the Daejeon Chamber of Commerce and Industry announced that the Business Survey Index for the second quarter of 2022 recorded 101, up 16 points from 85 in the first quarter.

The survey was conducted on 300 local manufacturing companies. Participating companies anticipated that the recovery in exports, the suspension of the vaccine pass, and the normalization of school attendance, among other eased quarantine measures, would be reflected in the business sentiment for the second quarter.

On the other hand, the prolonged Russia-Ukraine conflict, rising international oil and raw material prices, and exchange rate volatility were still cited as unavoidable concerns.

Earlier, the Business Survey Index for the first quarter of this year fell by 22 points compared to the fourth quarter of last year. This was largely attributed to geopolitical instability caused by the Russia-Ukraine conflict and the rise in global raw material and oil prices.

Companies participating in the survey responded that the increase in production costs due to rising oil and raw material prices would remain the biggest risk to business management in the second quarter (multiple responses 82.9%). Other concerns included ‘domestic demand slump due to the prolonged impact of COVID-19 (51.3%)’, ‘increased interest expenses due to the domestic interest rate hike trend (28.9%)’, ‘production disruptions caused by global supply chain issues (25%)’, and ‘worsening export difficulties due to easing international tensions (23.7%)’.

Regarding the key areas the next government should focus on to resolve internal and external difficulties in business management (multiple responses), companies selected ‘creating a business-friendly environment through deregulation (64.5%)’, ‘improving labor-related systems such as the minimum wage and the 52-hour workweek (53.9%)’, ‘responding to international relations including resolving global supply chain disruptions (32.9%)’, ‘expanding support for new technology development and fostering future industries (26.3%)’, and ‘promoting the advancement of existing industries through expanded support for business transformation and restructuring (25.0%)’.

A representative from the Daejeon Chamber of Commerce and Industry stated, “While the local manufacturing industry expects business sentiment to improve in the second quarter compared to the previous quarter, it still holds concerns about ongoing internal and external management risks. The government should strengthen institutional support by diversifying export destinations for export companies, expanding support for maritime and air logistics costs, and improving unreasonable regulations so that companies can overcome their anxieties.”

Meanwhile, the Business Survey Index quantifies the business sentiment felt by companies on the ground. An index above 100 means that more companies expect the business conditions to be positive compared to the previous quarter, while below 100 indicates the opposite.

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