Korean companies expect subdued economy in October

Federation of Korean Industries headquarters in Yeouido, western Seoul [YONHAP]

Most Korean companies expect the country’s economy to underperform in October, according to the economic outlook research by the Federation of Korean Industries (FKI) released Tuesday.

The Business Survey Index (BSI), or the forecast of Korea’s economy by Korean companies, for October stood at 90.6, according to FKI. A BSI below 100 indicates that companies with pessimistic views outnumbered optimistic ones.

The FKI surveyed 374 companies among the top 600 in terms of sales for the October forecast.

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“The overall BSI outlook for October dropped 6.3 points from the previous month, which was the sharpest decline since August 2021, when Covid-19 resurged with its delta variant,” the business lobby group said in a statement.

The October estimate extended the sub-100 BSI outlook to a streak of 19 months.

Pessimistic views were recorded across all sectors for October, as domestic demand (96.5), export (94.1) and investment (95.4) continued to log sluggish forecasts for 16 straight months.

By industry, manufacturing (88.1) and nonmanufacturing (93.3) industries declined together for a third straight month.

The manufacturing industry’s business outlook has remained dull for the past 18 months and the nonmanufacturing industry has been the same since August.

Among the 10 manufacturing industries, nonmetal was the only one that hit a BSI of 100. Clothing, medicines, electronics, petrochemicals, wood and paper, metal, machines, cars and food all fell short of 100.

Among the seven non-manufacturers, public utilities were the sole business that landed at 100. Leisure and accommodation, wholesale and retail, science and technology, communications, construction and logistics had dull outlooks.

Business sentiment for domestic demand will struggle to improve in October despite the long holiday, the FKI assessed.

“The possibility of a turnaround in the second half is decreasing from a triple slowdown in production, consumption and investment, dragged by lethargic industries and damp consumer sentiment,” said Choo Kwang-ho, head of FKI’s economic research division.

Innovation in labor and regulation needs to run in tandem with a close monitoring of consumer prices to boost economic activity and consumer sentiment, Choo added.

BY SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]