SMBA: "October SME Manufacturing and Service Production Slows... Impact of Economic Slowdown"

Exterior view of the Small and Medium Business Venture Research Institute building.

[Asia Economy Reporter Choi Dong-hyun] An analysis has emerged that small and medium-sized enterprise (SME) production is slowing due to the global economic slowdown and high inflation.

The Korea Small Business Institute (KOSI) announced this on the 26th through the 'KOSI SME Trends December Issue.' According to KOSI, the growth rate of the SME manufacturing production index in October this year was 1.6%, showing a smaller increase compared to the previous month (4.7%). During the same period, the growth rate of the SME service production index was 3%, down from 4.1% in the previous month.

As of last month, SME exports amounted to $9.2 billion (approximately 11.7714 trillion KRW), down 11.8% from the same month last year ($10.43 billion), marking a decline for three consecutive months. Although the strong performance of key SME export items such as automobiles (36.3%) and auto parts (11.6%) continued, semiconductor (-31.7%) and steel plates (-49.2%) underperformed due to weakening global demand. By country, exports to major markets such as China (-21.2%), Hong Kong (-35.2%), the United States (-1.7%), Japan (-11.9%), and Vietnam (-15.2%) continued to decline.

The number of SME employees last month was 25.385 million, an increase of 487,000 compared to the same month last year, maintaining a favorable employment recovery trend. By company size, the number of employees in firms with 1-4 employees increased by 65,000 compared to the same month last year. The number of employees in firms with 5-299 employees increased by 422,000. Additionally, the number of regular employees in SMEs increased by 506,000. Although temporary workers (-45,000) and daily workers (-90,000) decreased, the overall employment conditions in SMEs improved.

As of October, the number of startup companies was 98,967, down 9.2% compared to the same month last year. The number of technology-based startups was 16,679, a decrease of 5.6% year-on-year. In particular, real estate (-54.6%) and finance and insurance (-32.7%) sectors saw significant declines.

Han Chang-yong, head of the Policy Statistics Analysis Team at KOSI, stated, "The SME economy shows signs of slowing recovery in production and consumption due to the global economic slowdown and high inflation levels." He added, "With ongoing global uncertainties and continued interest rate hikes, combined with the impact of the second Cargo Solidarity strike, the recovery of the SME economy is expected to be sluggish." He further emphasized, "Policy measures must be prepared by authorities to prevent the worsening economic conditions and increased interest burdens from leading to difficulties in SME management."

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