Daejeon Chamber of Commerce: "Daejeon and Chungnam Companies' Economic Outlook Remains 'Cloudy'"

It is expected to be difficult to have an optimistic outlook on the business conditions of manufacturing companies in the Daejeon and Chungnam regions for the fourth quarter of this year.

The Daejeon Chamber of Commerce and Industry recently conducted a survey on the '2023 Q4 Business Condition Outlook Index' targeting manufacturing companies in the Daejeon and Chungnam regions.

Graph reflecting the changes in the Quarterly Business Outlook Index and the Business Survey Index from 2021 to 2023. Provided by Daejeon Chamber of Commerce and Industry.

The results showed that the business condition outlook index for local manufacturing companies was '74', which is below the national average of 84.

This figure is 11 points lower than the previous quarter's (Q3) outlook index of 85, and the business condition outlook index has been declining since Q2 (93).

The survey also recorded a Business Survey Index (BSI) of '50' for Q3, a significant drop of 32 points from the previous quarter (82).

In terms of performance by sector, all areas including 'Sales (50)', 'Operating Profit (44)', 'Facility Investment (86)', and 'Financial Conditions (60)' fell below the baseline of 100, confirming the deteriorated performance of local companies numerically.

The Daejeon Chamber of Commerce and Industry forecasted that the sectoral outlook indices for Q4 would also fall short of the baseline, with 'Sales (80)', 'Operating Profit (72)', 'Facility Investment (96)', and 'Financial Conditions (70)'.

Among the companies that participated in the survey, 70% responded that they fell short of their operating profit targets compared to the goals set at the beginning of this year, while only 30% reported achieving their target levels.

Responding companies cited multiple reasons for not reaching their operating profit targets, including 'Poor domestic sales (45.5%)', 'Decrease in exports due to slowdown in overseas markets (25.5%)', 'Increased financing costs due to high interest rates (10.9%)', 'Increased volatility in exchange rates and oil prices (10.9%)', and 'Disruptions in supply of raw materials (5.5%)'.

When asked to compare the second half outlook with the first half for key business variables, more than half of respondents answered that items such as 'Facility Investment (64.0%)', 'R&D Investment (75.5%)', and 'Export Performance (62.5%)' would be "similar to the first half."

A representative from the Daejeon Chamber of Commerce and Industry stated, "As household and self-employed debt steadily increases, the domestic market atmosphere is struggling to gain momentum. In addition, the prolonged high interest rate policy in major countries such as the United States, domestic inflationary pressures, and weakening domestic consumption are expected to cause difficulties for local companies in the fourth quarter of this year."

He added, "To revitalize the domestic real economy, the government needs to prepare support measures to stimulate consumption and expand financial support to reduce the burden on companies caused by interest rate hikes."

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