Inflation and Economic Uncertainty Continue, Corporate Business Sentiment Worsens for Three Consecutive Months

The Bank of Korea Reports 1-Point Drop in November Business Survey Index (BSI) Compared to Previous Month

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] As high inflation continues and economic uncertainty grows, the business sentiment among domestic companies has worsened for three consecutive months.

According to the November Business Survey Index (BSI) released by the Bank of Korea on the 23rd, the BSI for all industries this month stood at 75, down 1 point from 76 in October.

The BSI is a statistic that surveys companies' judgments and outlooks on the current business situation; if negative responses outnumber positive ones, the index falls below 100.

The overall industry BSI had declined for two consecutive months since May (86), then showed a slight increase in August, but fell again in September and has deteriorated for three consecutive months since.

The Bank of Korea explained, "The November BSI for all industries recorded 75, down 1 point from the previous month, amid ongoing high inflation and persistent economic uncertainty."

The manufacturing sector's November BSI rose 2 points from the previous month to 74. It increased mainly in petroleum refining and coke (+12 points), chemical substances and products (+11 points), and electrical equipment (+11 points). Large enterprises (+4 points), small and medium enterprises (+1 point), export companies (+4 points), and domestic companies (+2 points) all saw increases.

The manufacturing sector's BSI outlook for next month fell 4 points from the previous month to 69, mainly due to declines in electronic, video, and communication equipment (-13 points), rubber and plastics (-12 points), and primary metals (-8 points).

Next month, large enterprises are expected to remain unchanged from the previous month, while small and medium enterprises (-7 points), export companies (-5 points), and domestic companies (-3 points) all anticipate worsening conditions.

Manufacturing companies cited uncertain economic conditions (22.7%) as their biggest management difficulty, followed by rising raw material prices (18.5%) and sluggish domestic demand (11.4%). The proportion citing uncertain economic conditions rose by 2.9 percentage points from the previous month, while concerns about exchange rates fell by 4.2 percentage points to 8.3%.

The non-manufacturing sector's November BSI was 76, down 3 points from the previous month. The largest declines were seen in wholesale and retail trade (-5 points), business support and rental services (-7 points), and construction (-4 points).

The non-manufacturing sector's BSI outlook for next month also fell 1 point from the previous month to 77, mainly due to decreases in construction (-7 points), wholesale and retail trade (-3 points), and business support and rental services (-6 points).

Non-manufacturing companies also cited uncertain economic conditions (18.2%) as their biggest management difficulty, followed by labor shortages and rising labor costs (13.8%) and rising raw material prices (12.3%).

The Economic Sentiment Index (ESI) for November, which reflects both the BSI and the Consumer Sentiment Index (CSI), fell 4.1 points from the previous month to 91.4.

An ESI below 100 indicates that the economic sentiment of all private economic agents, including companies and households, has worsened compared to the past average.

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