Business not cheery about 2014: KCCI

Local manufacturers’ business sentiment hovered below 100 for the 10th consecutive quarter according to the Korea Chamber of Commerce and Industry, reflecting a lack of optimism about the local economy next year.

The Business Survey Index of 2,500 manufacturers registered 92 for the first quarter of next year, the KCCI said yesterday. That marked the 10th quarter in which it was below 100 since it fell to 94 in the fourth quarter of 2011 from 103 in the previous quarter.

If the index is less than 100, companies with a negative outlook of the economy for the upcoming quarter outnumber those with a positive outlook.

“Despite the improvement of some macroeconomic indexes and a forecast of more than 3 percent growth for the Korean economy by major institutions at home and abroad, businesses do not appear to have a high expectation of economic recovery,” said the KCCI in a statement.

Conglomerates were less pessimistic than smaller companies. The BSI for the large companies stood at 97, three points higher than the previous quarter.

The figure for the small and mid-sized enterprises fell to as low as 91.

A similar disparity was observed between exporters and domestic players. The BSI for exporters stood at 100 compared with 90 for purely domestic players. In the previous quarter, the figure for exporters was 101 and for companies concentrated on domestic sales it was 93.

Most of the companies expected the local economy to kick start in the second half of next year or later. Asked about the timing of such a recovery, 45.4 percent of the companies said it will begin in the second half of next year, while 38.9 percent said it will be in 2015 or later. Only 14.5 percent said recovery will be felt in the first half of next year.

“We expect the economy to revive next year, lifted by a gradual recovery of the global economy led by advanced countries,” said Chun Su-bong, an executive director of the KCCI.

Chun called for government support for businesses, citing some challenges from recent changes in economic circumstances at home and abroad that could weigh on companies, such as the tapering of quantitative easing in the United States and a Supreme Court ruling that will lead to a new definition of base salaries at Korean companies.

BY MOON GWANG-LIP [joe@joongang.co.kr]