November BSI 90.1... Corporate Sentiment Weak Due to Middle East-Originated Risks

As the war between Israel and the Palestinian armed faction Hamas escalates geopolitical risks originating from the Middle East, the business sentiment among our companies is also sluggish.

On the 25th, the Korea Economic Association (hereinafter referred to as KEA) conducted a Business Survey Index (BSI) on the top 600 companies by sales revenue. The BSI outlook for November recorded 90.1, down 0.5 points from 90.6 in October. The BSI outlook has been below the baseline of 100 since April last year (99.1).

The actual BSI for October was 91.8. This also fell below the baseline of 100 and was lower than September’s 93.0, indicating a continued deterioration in corporate performance.

By industry sector in November, both manufacturing (89.1) and non-manufacturing (91.1) showed sluggish performance for the fourth consecutive month. Among the 10 detailed manufacturing sectors, only general and precision machinery and equipment (105.3) showed a positive outlook, while the other nine sectors, including textiles and apparel (71.4), indicated poor business conditions.

The BSI by survey category showed negative outlooks across all sectors. In particular, domestic demand (95.3), exports (94.8), and investment (90.7) have failed to exceed the baseline for 17 consecutive months.

KEA expressed concern that if the conflict between Israel and Hamas expands to oil-producing countries such as Iran, the resulting sharp rise in oil prices could cause domestic price instability and increased manufacturing costs, further worsening the business sentiment of manufacturers.

Choo Kwang-ho, head of KEA’s Economic and Industrial Division, said, “Recently, domestic companies are facing increased management difficulties due to prolonged economic downturn and external uncertainties such as the Israel-Hamas conflict. To minimize the domestic impact of external risks, proactive countermeasures should be prepared, and support measures to promote domestic demand and exports are necessary to revitalize corporate management.”

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