The Business Survey Index (BSI) of the top 600 companies for April 2013 was 101.5, surpassing the standard of 100 for the second consecutive month. It was attributable to the result that enterprises expected the recovery of domestic consumption following the government's pump-priming measures, including the passage of the government's reorganization bill and the extension of the real estate acquisition tax deduction favor.
In addition, the news on the continuation of the U.S. Federal Reserve's quantitative easing, which may boost the U.S. economic recovery, heightened Korean firms' expectation of an increase in their exports to the U.S. But the weighted BSI, which considered sales, was 98.9, indicating that large firms are still expressing worries over the economy. The BSI in the business fund situation sector also stood at 98.0, below the standard of 100, casting concern about the future economic trend.
Internally, first of all, the expectation for realization of the government's concrete pump-priming measures was heightened in the wake of the passage of the government's reorganization bill. President Geun Hye Park ordered the cabinet on March 18 to suggest the 2013 economic policy direction to let the people have a hope of an economic recovery, boosting expectation of the measures to activate the economy.
The new government's economic team, which hinted a comprehensive and short-term policy, was officially launched on March 22, adding momentum to the realization of the government's concrete pump-priming measures. Along with this, the bill for the six-month extension of the real estate acquisition tax deduction favor, which had been delayed owing to the negotiation on the government's reorganization bill, was passed at the National Assembly, enhancing the expectation of the recovery of domestic consumption. In addition, the U.S. Federal Reserve announced the implementation of the uninterrupted quantitative easing on March 20, raising Korean companies' expectation of an increase in their exports to the U.S. following the U.S. economic recovery.
As the U.S. indicators for employment and housing business recently improved, there were growing worries over the "exit strategy" to withdraw the money issued through the quantitative easing. However, Federal Reserve Chairman Bernanke stressed after the regular meeting in March that such a recovery pace of indicators is not a temporary one, confirming that it will continue implementing the quantitative easing step.
Meanwhile, such a powerful will to stimulate the economy paradoxically means the high possibility of the economic downturn so that we still need to pay keen attention to uneasy factors both at home and abroad. Recently, KDI predicted the Korean economic growth to reach a level of 2.7~2.8% for 2013 as the economic slowdown is serious. Business psychology is also feared to dampen if the contents of the new government's pump-priming measures fall behind the expectation or fail to produce tangible results.
By sector, a positive prospect was made in domestic consumption(104.0), exports(107.9), investment(100.9), employment(100.7) and profitability(101.5). But a negative prospect was appeared in fund situation(98.0) and stockpiles(103.5)*. In particular, the continued sluggishness in the fund situation index indicates that enterprises are facing difficulty in securing cash owing to reduced sales and worsened liquidity, so that the government's financial supports are required for their smooth fund-raising.
*The stockpile index of over 100 means a negative prospect (inventory glut).
Meanwhile, the BSI result of 600 companies for March was 101.3, surpassing the standard of 100 in one year. All sectors, excluding fund situation(96.0), profitability(99.4), investment(100.0) and stockpiles(106.6), enjoyed a favorable performance. For instance, domestic sales(106.6), exports(104.6) and employment(100.2) posted good results.
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