SMEs express hope in Choi’s policies

Small and medium-size manufacturers think September could be a turning point for them thanks to the policies announced by the administration’s new economic team.

The Small Business Health Index (SBHI), which measures the optimism small and midsize business have about the economy, saw an upward trend for the first time in five months.

For the SBHI, 100 points or higher means survey participants believe that the economy will improve in the coming month, while lower than 100 points means the opposite.

According to the monthly index released yesterday, prospects for September stood at 88.6 points, up 7 points compared to this month.

This is lower than 90.3 points for last September.

The index is compiled by the Korea Federation of Small and Medium Business (Kbiz), a lobbying group that represents individual businesspeople and small companies. The index is a result of the Kbiz survey of 1,367 small manufacturers in 22 industries this month.

The indexes improved in all areas of the economy compared to this month: Production posted 88.7 points, domestic sales 87.6 points, exports 90.5 points and corporate financial status at 85.7 points.

A total of 19 manufacturing industries - including print, lumber, pharmaceuticals and non-metallic minerals - were expected to grow next month. But medical equipment and general machinery manufacturers expected a gloomy month.

By size of businesses, companies of less than 50 employees posted 87.8 points from 79.7 points this month, a larger improvement than midsize businesses, which posted 90.9 points compared to 86.7 points this month.

“The positive turnaround reflects upcoming changes in Korean economic and financial policies promised by the government’s new economic team [led by the deputy prime minister for the economy, Choi Kyung-hwan, and BOK Governor Lee Ju-yeol],” Kbiz explained in a statement yesterday.

Analysts said Choi’s aggressive approach to encouraging consumer spending to charge the domestic market will improve sales of small manufacturers.

“While the tragic sinking of the Sewol is still dragging down domestic spending, Choi’s domestic economy revitalization policies will help,” said Choi Hwan-seok, a researcher at the Korea Small Business Institute.

“Also, the central bank’s decision to lower interest rates helped,” said Choi. “Some say there might be an additional 0.25 percent drop by the end of the year. This will be a huge help for small businesses, which can save money they are currently paying in interest because many of them rely on loans for their businesses.”

However, Choi said he was uncertain that such an upward trend will continue.

“I think it’s early to conclude that this trend will last long,” Choi said.

BY KIM JI-YOON [jiyoon.kim@joongang.co.kr]