The economic recovery of domestic companies has been put on hold.
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According to the results of a business due diligence index (BSI) survey conducted on the 29th by the Korea Economic Research Institute (hereinafter referred to as the Hankyung-yeon) for 600 companies based on sales, the overall BSI forecast for August was 95.2, down 7.1 points from the previous month.
BSI projections above 100 on a scale of 100 indicate a positive economic outlook, and below 100 indicate a negative economic outlook.
The BSI forecast, which had maintained a positive economic outlook since March of this year, began to fall below the baseline for the first time in five months. The overall economic performance in July also fell 7.1 points from the previous month to 99.1, falling below the baseline for the first time in four months.
The forecast for August by sector was △domestic 93.7 △exports 95.4 △investment 100.6 △employment 104.6 △financial situation 99.7 △ profitability 93.4 △ inventory 98.3.
Among them, the negative outlook prevailed in four areas: domestic demand, export, financial situation, and profitability. Investment, employment, and inventory showed a favorable outlook, but investment and employment recorded slightly slower figures than the July forecast (102.3 and 105.7, respectively).
By industry, the outlook for August was negative for both manufacturing (94.0) and non-manufacturing (96.7). Hankyung-yeon explained that the 4th COVID-19 pandemic caused by the delta mutation is shrinking corporate sentiment across the domestic industry.
In particular, in the non-manufacturing industry, despite the brisk growth in the electricity, gas, and water industries due to the increase in seasonal demand, the forecast fell sharply mainly in the face-to-face service industries such as wholesale/retail, leisure/lodging and dining out and air transportation, fell down
Meanwhile, the rise in international raw material prices and shipping costs continued in July, increasing economic uncertainty. The Korea Economic Research Institute cited the decline in export price competitiveness due to cost increases as a factor that worsened the export outlook for August. If the recent re-spread of Corona in major consumer markets, such as the US and EU, leads to a contraction in consumption, he added that it is concerned that the export of Korean companies will be severely affected.
Choo Gwang-ho, head of economic policy at the Korea Economic Daily, said, “The fear of stagflation, which means an economic recession accompanied by inflation, is becoming visible as the supply shock caused by the rise in raw material and freight costs and the re-spread of the coronavirus are intertwined.” “Inflation factors such as rising raw material prices We need to improve the productivity of the industry as a whole so that we can absorb this,” he said.
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