Burden of Prolonged High Interest Rates... 65% of Export Companies Say "Financial Conditions Worsened"

Martial Arts, Survey of 500 Member Companies
"Measures to Raise Guarantee Limits and More"

The prolonged period of high interest rates has worsened the financial conditions of export companies.

The Korea International Trade Association (KITA) announced on the 3rd that in a survey conducted last month on financial difficulties among 500 member companies, 65.6% responded that their financial conditions had deteriorated. Of these, 49.2% said "somewhat worsened" and 16.4% said "significantly worsened."

The percentage of respondents reporting worsened financial conditions increased by 20 percentage points compared to 45.6% in the same survey conducted in December last year.

KITA stated that in the December survey, companies most frequently cited "interest rate hikes" as the main cause of financial difficulties, but this time "poor sales" was the leading reason. KITA explained, "The prolonged high interest rates have negatively impacted the overall business environment, including reduced purchasing power."

On the afternoon of May 1st, shadows were cast over the Busan Port area. [Photo by Yonhap News]

Among the surveyed companies, 54% said it was difficult to secure external funding. To overcome financial difficulties, companies are making efforts to improve organizational efficiency through budget cuts (27.6%), workforce reductions (20%), and business restructuring (15.8%).

Although the government announced plans to supply the largest-ever trade finance in the second half of the year, 77.3% of export companies said the scale of policy financial support was insufficient.

Companies responded that "relief from interest burden" (79%, multiple answers allowed) was the most needed support. This was followed by the need for expanded loan and credit guarantee limits (63.6%) and deferment of loan repayments and interest payments (41.8%).

Jung Manki, Vice Chairman of KITA, said, "The prolonged high interest rates have especially intensified difficulties for small and medium export companies. If easing high interest rates is difficult, practical measures such as raising the credit guarantee limits per company from the current 3 billion KRW to 15 billion KRW at the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation, and allowing overlapping guarantees from both institutions, need to be prepared."

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