Mid-sized Companies' Economic Outlook Improves in Q2 This Year... Positive Forecast for Facility Investment

Announcement of the 2023 Q2 Mid-sized Companies Economic Outlook Survey

The economic outlook for domestic mid-sized companies in the second quarter of this year has been improving, according to a survey. The Ministry of Trade, Industry and Energy (Minister Lee Chang-yang, hereinafter referred to as the Ministry) announced the results of the "2023 Q2 Mid-sized Companies Economic Outlook Survey" on the 6th, revealing this trend.

In this survey, the overall economic outlook index showed a slight improvement, rising by 0.7 points from 93.4 in the previous quarter to 94.1. Notably, the outlook index for facility investment size turned positive at 101.8, up from a negative outlook of 98.9 in the previous quarter.

The economic outlook survey evaluated the current quarter and forecasted the next quarter by comparing quarterly economic and business performance of 620 mid-sized companies with the previous quarter. An index above 100 indicates a positive outlook for the next quarter compared to the previous one, while below 100 indicates a negative outlook.

Manufacturing recorded an index of 94.2, with most sectors maintaining a negative outlook; however, positive forecasts in the automobile and chemical sectors caused a slight increase in the index. The automobile sector (104.1) maintained a positive outlook due to strong sales of new vehicles such as eco-friendly cars and sport utility vehicles. The chemical sector (100.0) saw a significant rise from 79.6 in the previous quarter, driven by expectations related to the commencement of large-scale petrochemical production facilities. Additionally, the primary metals sector (96.6) slightly increased from 85.8 in the previous quarter due to rising demand for steel (vehicle steel sheets).

The non-manufacturing sector recorded an index of 94.1, maintaining a negative outlook. The construction industry (89.7) slightly declined due to rising construction material prices, while the transportation sector (74.0) fell due to ongoing economic recession and reduced maritime freight rates.

Exports showed a slight increase to 97.3 compared to 96.7 in the previous quarter. Domestic demand fell slightly to 93.6 from 94.9 in the previous quarter.

The production outlook index was 99.9, close to a positive 100. While most sectors maintained a negative outlook, slight increases in the automobile (106.8) and primary metals (100.6) sectors led the index upward.

The facility investment size index turned positive at 101.8, up from a negative outlook of 98.9 in the previous quarter. This is the highest outlook index since Q4 2021. Particularly, the primary metals (105.8) and automobile (103.8) sectors showed positive forecasts. Additionally, mid-sized companies projected an average facility operation rate of 80.5% for Q2 this year.

Regarding management difficulties, mid-sized manufacturing companies cited rising raw material prices (46.4%) as their top concern, while non-manufacturing companies pointed to sluggish domestic demand (48.8%). Je Kyung-hee, Director of Mid-sized Company Policy at the Ministry, stated, "Despite challenging domestic and international economic conditions, the slight improvement in outlook indices centered on exports and production reflects mid-sized companies' expectations for economic recovery. The shift to a positive outlook for facility investment size is a green light for expanded corporate investment."

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