The Business Survey Index (BSI), a survey of the nation's top 600 companies in sales conducted by the Federation of Korean Industries (FKI), stood at 99.8 for May, falling for the first time in three months below the standard 100. A BSI reading below 100 indicates companies expect business conditions to deteriorate.
The gloomy outlook was in response to a combination of the government's real estate market stimulus package announced on April 1, and the supplementary budget, as well as external factors, said FKI.
The external factors included the falling value of the Japanese yen trading closer to 100 yen against the US dollar, the downturn in the Chinese economic growth in the first quarter, and poor indicators for U.S. employment. Signs for improving our business conditions are not yet in sight; in addition to the downward revision of the global economic forecast by the International Monetary Fund(IMF), McKinsey & Company and Foreign Policy further warned Korea would be likely to lose growth potential.
"For the first time, our economic growth rate has kept hovering around the zero percent level for eight consecutive quarters, and we're concerned about the possibility of a protracted business downturn. Fortunately, the supplementary budget was approved. Excluding some of it for shoring up the shortage of tax revenues, however, only less than three trillion won was earmarked for the economic stimulus package," expounded Executive Director Sang Geun Bae of FKI.
"On top of the worsening economic conditions in and out of Korea, some of the legislative measures might turn out to be stumbling blocks to corporate investment and job creation," he added. He also stressed, "A number of businesses are temporarily strapped, and they are hunger for financial support from the government."
By sector, the BSI showed poor performances in April: domestic demand(102.2), export(100.4), investment(100.2), and employment(100.9); financial status(97.4), profitability(98.7), and inventories(106.8).
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