Establishing the 2024 Management Strategy Direction: 'Stability Strategy'

Economic Recovery Expected from 2025

The Gwangyang Chamber of Commerce and Industry in Jeonnam (Chairman Lee Baek-gu) announced that the '2024 1st Quarter Business Outlook Survey,' conducted from November 23 to December 1 targeting about 100 local companies, showed the Business Survey Index (BSI) at 86.7 points.

Although this is an increase of 11.1 points compared to the 4th quarter of 2023 (75.6 points), the BSI remained below 100, indicating that the prolonged recession is expected to continue for the ninth consecutive quarter (from Q1 2022 to Q1 2024).

[Photo by Gwangyang Chamber of Commerce and Industry]

The Business Survey Index (BSI) quantifies companies' on-site economic sentiment on a scale from 0 to 200. A score above 100 means more companies expect the economy to improve compared to the previous quarter, while a score below 100 indicates more companies anticipate a downturn.

Regarding expected operating profit and investment performance compared to early 2023, responses for operating profit achievement were: 'Annual target achieved' (44.4%), 'Underachievement within 10%' (28.9%), 'Underachievement over 10%' (22.2%), and 'Overachievement over 10%' (4.5%). The main factors for underachievement were cited as 'Domestic demand slump' (60.9%), 'Raw material prices' (17.4%), 'Export slump' (8.7%), 'High interest rates' (4.4%), 'High exchange rates' (4.3%), and 'Others' (4.3%).

For investment performance expectations, responses were: 'Annual target achieved' (53.3%), 'Underachievement over 10%' (22.2%), 'Underachievement within 10%' (17.8%), 'Overachievement over 10%' (4.4%), and 'Overachievement within 10%' (2.3%). The key reasons for underachievement included 'Production slump' (33.3%), 'Business plan reduction/delay' (27.8%), 'High interest rate burden' (22.2%), and 'Financial difficulties' (16.7%).

Looking at predictions for next year (2024) compared to this year in terms of sales, exports, and investment: for sales, responses were 'Will increase' (42.3%), 'Same as this year' (33.3%), and 'Will decrease' (24.4%), indicating an expected increase in sales.

For exports, responses were 'Will increase' (11.0%), 'Same as this year' (73.3%), and 'Will decrease' (15.7%), suggesting exports will remain similar to this year.

Regarding investment plans, responses were 'Will increase' (15.5%), 'Same as this year' (62.2%), and 'Will decrease' (22.3%), indicating investment plans are also expected to be similar to this year.

When asked about the basic management strategy direction for 2024, responses were 'Stability strategy' (68.9%), 'Growth strategy' (26.7%), and 'Downsizing strategy' (4.4%).

The most threatening internal and external risk factors expected for business activities next year were 'Labor supply and labor-management conflicts' (28.9%), 'High oil and raw material prices' (24.4%), and 'Funding burden due to high interest rates' (23.3%). Following these were 'Raw material procurement difficulties' (6.7%), 'Prolonged export slump' (5.6%), 'Foreign exchange risks such as high exchange rates' (5.6%), 'Others' (3.3%), and 'Unexpected issues such as war' (2.2%).

Regarding the forecast for South Korea's economic growth rate in 2024, responses were: '2.0%~2.5%' (26.7%), '1.5%~2.0%' (22.1%), '0%~0.5%' (17.8%), '1.0%~1.5%' (15.6%), '0.5%~1.0%' (11.1%), and '0% or negative' (6.7%).

When asked when the economy is expected to recover, responses were: from 2025 (40.0%), the second half of next year (37.7%), after 2026 (15.6%), and the first half of next year (6.7%).

Regarding the most important policy tasks for economic recovery, the top responses were 'Price control and interest rate normalization' (41.1%), 'Easing corporate regulatory burdens' (16.7%), and 'Labor market reform' (14.4%). Other responses included 'Strengthening export competitiveness' (12.2%), 'Expanding support for the national power industry' (11.1%), 'Managing external risks such as US-China conflicts' (3.3%), and 'Others' (1.2%).

A representative from the Gwangyang Chamber of Commerce and Industry stated, "While the outlook for 2024 is predominantly for growth in the low 2% range, there is also analysis suggesting that growth recovery will be slow due to continued domestic demand weakness caused by high inflation and high interest rates. As a result, household consumption is shrinking, and corporate facility investment is sluggish due to increased inventory burdens, leading companies to set management strategies focused more on 'stability' than 'growth.'"

He added, "At this point, active government responses in terms of policy, such as price control, interest rate normalization, and easing corporate regulatory burdens, are necessary for economic recovery."

Asia Economy Honam Reporting Headquarters, Reporter Heo Seon-sik hss79@asiae.co.kr

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