Post-COVID-19 SME Business Outlook Index Hits 'Highest'... Optimism Rises with Social Distancing Lift

Yeouido Hangang Park in Yeongdeungpo-gu, Seoul is bustling with visitors. [Image source=Yonhap News]

[Asia Economy Reporter Donghyun Choi] The Small and Medium Business (SMB) Business Outlook Index has reached its highest level since the outbreak of COVID-19 in South Korea. This is interpreted as a positive impact on the perceived business conditions of SMBs due to the government's full lifting of social distancing measures and expectations surrounding the new administration.

The Korea Federation of SMEs announced on the 28th that the May SMB Business Outlook Survey, conducted from the 14th to the 21st among 3,150 small and medium enterprises, showed that the Business Outlook Index (SBHI) rose by 2.9 points from the previous month to 87.6.

A business outlook index above 100 indicates that more companies responded positively than negatively, while a figure below 100 indicates the opposite.

This figure is the highest since January 2020, when COVID-19 first occurred domestically. In particular, the increase was notable in beverages (84.3→106.5) and lodging and restaurants (76.8→95.0), driven by the peak season of May, the month of family, and the lifting of operating hour restrictions.

By industry, the manufacturing sector's May business outlook rose 2.3 points from the previous month to 88.8. Sixteen industries, centered on beverages and food products (79.1→90.6), showed increases. Conversely, six industries including furniture (81.8→75.5) and chemicals and chemical products (86.5→82.9) declined.

The non-manufacturing sector rose 3.2 points from the previous month to 86.9. Both construction (80.0→83.4) and service industries (84.5→87.7) showed improved business outlooks compared to the previous month.

Looking at the outlook by category across all industries surveyed, exports (90.6→89.4) and employment (92.5→93.3) are expected to slightly worsen compared to the previous month. However, domestic sales (84.3→87.6), operating profit (79.9→82.4), and financial conditions (79.4→81.7) outlooks rose compared to the previous month.

In this survey, SMBs cited sluggish domestic demand (57.6%) as the main difficulty. Rising raw material prices (52.0%), increased labor costs (45.2%), and excessive competition among companies (38.8%) followed.

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