September BSI 95.8... Rebounded but Economic Outlook Still Weak

[Asia Economy Reporter Park Sun-mi] The Business Survey Index (BSI), which reflects companies' economic outlook, recorded 95.8 in September, falling below the baseline for six consecutive months.

On the 25th, the Federation of Korean Industries conducted a BSI survey targeting the top 600 companies by sales, revealing that the September BSI outlook stood at 95.8. Although this marked an 8.9-point rebound from August's 86.9, ongoing uncertainties in corporate management due to concerns over global economic slowdown caused the index to remain below the baseline of 100 for six consecutive months since April (99.1), indicating a prolonged period of pessimistic outlook.

In September, the BSI by sector showed that manufacturing (96.6) and non-manufacturing (94.8) both experienced four consecutive months of simultaneous downturns since June. With domestic COVID-19 cases reaching their highest since April, non-manufacturing sectors, including face-to-face services, were expected to perform worse than manufacturing. Manufacturing is particularly expected to face poor profitability (89.9) and financial conditions (89.9) due to high interest rates and high exchange rates.

Among detailed industries in September, within non-manufacturing, leisure and accommodation (66.7) was the most sluggish due to concerns over contraction in face-to-face service sectors amid the resurgence of COVID-19. Within manufacturing, textiles and apparel (70.0) showed the weakest performance due to reduced sales and excess inventory caused by decreased consumption.

Looking at the BSI by survey category in September, all sectors except employment (101.8) showed negative outlooks for three consecutive months: profitability (92.8), financial conditions (93.1), investment (98.2), exports (98.5), domestic demand (98.8), and inventory (102.1). Notably, exports (98.5) and domestic demand (98.8) have both been in decline for three consecutive months, marking the first time in 19 months since February 2021 (exports 92.4, domestic demand 93.4).

With economic growth in major export destinations such as the U.S. and China underperforming expectations, and domestic consumer sentiment significantly deteriorating since June, concerns over shrinking domestic and international consumer demand are mounting. Choo Kwang-ho, head of the economic division at the Federation of Korean Industries, stated, “As high inflation and high interest rates increase downside risks to the global economy, including Korea, domestic companies may face worsening performance and financial pressure.” He added, “It is necessary to enhance corporate management vitality through deregulation, tax burden reduction, and adjusting the pace of interest rate hikes.”

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