Accountants "Perceived Economic Conditions Worsen in Q3... Q4 Expected to Be Worse"

[Photo by Korean Institute of Certified Public Accountants]

[Asia Economy Reporter Lee Jung-yoon] Certified public accountants (CPAs) reported that the perceived economic conditions in the third quarter of this year worsened compared to the previous quarter.

The Korean Institute of Certified Public Accountants announced on the 29th the 'CPA Business Survey Index (CPA BSI)' for the third quarter of this year. According to the CPA BSI survey results, the economic status BSI for the third quarter recorded 74. The BSI uses 100 as the baseline; a value above 100 indicates economic improvement, while below 100 indicates economic deterioration.

Falling below the baseline of 100, the perceived economic conditions among CPAs worsened compared to the previous quarter. It dropped by 13 points from the second quarter, suggesting a further decline in economic sentiment. Additionally, the outlook for the fourth quarter stands at 69, the lowest level since 37 in the third quarter of 2020. This reflects the growing concerns over a global economic recession amid rising interest rates and worsening trade conditions, both domestically and internationally.

The main factors influencing economic judgment were selected as exchange rates and interest rates, prices of raw and subsidiary materials, and exports. The Federal Reserve's interest rate hikes have caused the Korea-US interest rate differential to reverse again, potentially triggering a vicious cycle of high exchange rates, high inflation, and high interest rates. Furthermore, increased energy demand during the winter season and concerns over the escalation of the Russia-Ukraine war contribute to ongoing instability in raw material prices.

The key detailed factors expected to impact the domestic economy going forward include ▲ raw material prices and inflation (28%) ▲ global economic trends (25%) ▲ monetary policy direction and changes in funding environment (22%).

By industry, both current BSI and outlook BSI mostly decreased compared to the previous quarter, indicating an overall slowdown in major industries. The electronics (89), steel (84), petrochemical (82), and construction (68) industries saw declines in their BSI indices and were classified as underperforming sectors. Meanwhile, the automobile (109), shipbuilding (109), and information and communication (109) industries exceeded the 100 mark, indicating a positive outlook.

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