Corporate Business Outlook Declines for 15 Consecutive Months... June BSI at 90.9

Companies have issued negative economic outlooks for 15 consecutive months.

On the 23rd, the Federation of Korean Industries (hereinafter FKI) conducted a Business Survey Index (BSI) on 600 major companies based on sales revenue, and the BSI outlook for June recorded 90.9. A BSI above 100 indicates a positive economic outlook, while a BSI below 100 signifies a predominantly negative economic outlook. The BSI outlook has remained below the baseline of 100 for 15 consecutive months since April last year (99.1). This 15-month streak of sluggishness is the longest since February 2021.

The May BSI actual figure, surveyed simultaneously, recorded 92.7, marking 16 consecutive months of underperformance since February last year (91.5), indicating a prolonged period of poor corporate performance.

When monthly BSI figures are converted to the annual second quarter standard (average BSI outlook from April to June), the BSI outlook for the second quarter of this year is 92.6. Excluding the second quarter of 2020 (63.3), which was the early stage of the COVID-19 outbreak, this is the lowest figure since the second quarter of 1998 (64.3) during the foreign exchange crisis.

In June, the BSI by industry showed that both manufacturing (90.9) and non-manufacturing (90.9) sectors fell below the baseline of 100 for 13 consecutive months since June last year, indicating simultaneous sluggishness. Only three industries?automobiles, pharmaceuticals, and non-metallic minerals?hovered around the baseline, while the remaining seven industries, including wood and furniture (60.0), metals and metal products (81.3), textiles and apparel (85.7), petroleum refining and chemicals (88.9), food and beverages (94.7), electronics and telecommunications equipment (95.2), and general and precision machinery and equipment (95.5), all forecasted poor performance.

In particular, the electronics and telecommunications equipment BSI, which includes semiconductors, has been below the baseline for nine consecutive months. The FKI predicted that due to the uncertain economic outlook in the electronics and electrical sectors, not only semiconductor exports but also South Korea’s overall exports will continue to underperform for the time being.

Choo Kwang-ho, head of the Economic and Industrial Headquarters at FKI, stated, “Corporate sentiment has been severely dampened due to poor performance,” adding, “It is necessary to swiftly implement tax reforms, labor market reforms, and regulatory improvements to boost corporate vitality, and to closely monitor key price variables (minimum wage, interest rates, inflation, etc.) that could affect production costs.”

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