Changwon Chamber of Commerce and Industry Announces Q1 Business Outlook Survey for Changwon Region Companies

Temperature Differences by Industry, Changwon Manufacturing
Expected to Maintain Last Quarter's Level in Gyeonggi

The Changwon Chamber of Commerce and Industry in Gyeongnam announced the results of the '2024 1st Quarter Changwon Regional Business Outlook Survey' conducted on manufacturing companies in the Changwon area. According to the survey, which received responses from 153 companies, the Business Survey Index (BSI) was measured at '98.0', while the performance-based BSI was '75.2', significantly below the baseline.

Changwon Chamber of Commerce and Industry, Gyeongnam.
Photo by Lee Seryeong

The trend of the manufacturing outlook and performance perception BSI in the Changwon region showed that the performance BSI fell well below the baseline due to factors such as deteriorating investment sentiment caused by interest rate hikes and fiscal tightening, profitability deterioration due to rising producer prices from increased raw material costs and high inflation, prolonged economic sluggishness in China, the main export market, and intensified global competition due to the weak yen. The outlook BSI was surveyed as slightly weak, reflecting expectations that these domestic and international conditions will persist into the first quarter of this year.

The 1st quarter itemized outlook BSI showed that except for sales (103.3), all other sectors including facility investment (91.5), operating profit (90.2), and financial conditions (78.4) fell below the baseline. While sales recovery is expected, profitability is projected to remain insufficient, which is likely to lead to worsening financial conditions for companies and negatively impact facility investments.

Perspectives on the first quarter economy varied by industry. Other transportation equipment manufacturing (114.3), machinery and equipment manufacturing (103.9), and automobile and parts manufacturing (103.8) forecast a positive outlook for the first quarter, whereas steel and metal (80.0) and other manufacturing (76.9) fell significantly below the baseline, indicating a negative outlook.

Other transportation equipment manufacturing anticipates a positive effect from consecutive domestic and international orders in key sectors such as shipbuilding, aviation, and railway equipment, along with the resulting trickle-down effects. The automobile and parts sectors expect continued export growth following last year, leading to a positive outlook for the first quarter.

However, the steel and metal products manufacturing industry, which has a high import ratio, is struggling to secure profitability due to rising international raw material prices and an upward exchange rate trend. Additionally, increased imports of Japanese steel products, which have secured price competitiveness due to the weak yen, appear to be dragging down the perceived business conditions of local steel and metal manufacturers.

Meanwhile, when asked whether they achieved their operating profit targets set last year, 59.5% of respondents answered 'fell short of the target', 26.1% said 'achieved the target level', and only 14.4% reported 'exceeded the target level'. The main reasons for falling short were cited as 'poor domestic sales' (38.5%), 'poor exports' (24.2%), 'raw material prices' (20.9%), and 'high interest rates' (9.9%), in that order.

Regarding the achievement of last year's investment performance targets, 42.5% of respondents answered 'fell short of the target'. The main reasons given were 'reduction and delay of business plans' (49.2%) and 'burden of high interest rates' (26.2%).

A representative from the Changwon Chamber of Commerce and Industry stated, "With the triple adverse factors, China's interest rate slowdown, and the weak yen remaining unchanged, it seems that difficulties in securing corporate profitability will continue this year." However, they expressed optimism, saying, "Although there are differences by industry, more companies, especially in the core manufacturing sectors of Changwon's industry, are looking positively at the business outlook for the first quarter of this year."

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