More than 7 out of 10 Small and Medium Enterprises Expect Economic Slump to Continue This Year and Next

Prolonged High Interest Rates Expected to Continue Challenges for a While
SMEs Call for Expanded Support Measures to Overcome Complex Crisis

More than 7 out of 10 small and medium-sized enterprises (SMEs) expected last year's economic downturn to continue this year and anticipated a slow recovery next year as well.

On the 30th, IBK Industrial Bank of Korea announced the results of the "2024 SME Financial Status Survey." The bank advanced the publication timing from October to July to make the survey results more timely for the second half SME economic outlook. The survey was conducted targeting 4,500 SMEs with annual sales exceeding 500 million KRW registered in the corporate statistics registry to understand the financial situation of SMEs in 2023 and the economic outlook beyond 2024.

The survey results showed that 65.9% of SMEs responded that their business conditions in 2023 were the same or worse than before. Regarding new fund procurement, opinions that financing conditions had worsened compared to the previous year due to rising loan interest rates and increased collateral requirements rose by 1.6 percentage points (P). In particular, the proportion of responses citing "deterioration of interest rate conditions" increased by 33.9 percentage points compared to the previous year, indicating that difficulties faced by SMEs due to prolonged high interest rates are still ongoing.

Despite the sluggish economic conditions, some companies experienced improved financial situations, revealing a polarization in the SME economy. The proportion of companies managing surplus funds increased by 3.9 percentage points compared to the previous year, and accordingly, the average payment period for purchasing and sales funds slightly decreased.

Furthermore, regarding the economic outlook for the second half of this year, 76.1% of SMEs responded that last year's economic downturn would continue "unchanged." Similarly, the outlook for next year also showed a majority of 72.6% responding "unchanged."

Meanwhile, SMEs expecting a slow economic recovery hoped for expanded financial support measures to alleviate financial difficulties, such as interest rate cuts, increased loan limits, and high-interest subsidy products. An IBK Industrial Bank official stated, "The ongoing triple challenges (high interest rates, high prices, and high exchange rates) will continue to cause difficulties for SMEs for some time," adding, "We are providing various financial and non-financial services to help SMEs overcome this complex crisis and will continue to expand support measures to resolve their financial difficulties."

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