Some analysts point out that the Korean economy is mostly suffering from external troubles such as Japan’s trade restrictions and trade disputes between China and the United States, let alone its sluggish domestic demand. Making matters worse, the global economic recession contributes to the worsening conditions for the South Korean manufacturers.
The Korea Chamber of Commerce and Industry (KCCI) recently said that the Business Survey Index (BSI) of 2,200 local manufactures for the fourth quarter stood at 72, down 1 point from the previous quarter. A BSI reading below 100 means more companies are pessimistic about the economy compared to the previous quarter, while a figure above the benchmark means the opposite.
The export corporation BSI fell to 85, down 3 points from the second quarter, and the domestic corporation BSI fell 1 point to 69 respectively.
These outlook figures are alarming that the country’s businesses should tighten belts toward the achievement of their goals. In the KCCI’s survey, two out of three companies (62.5 percent) answered that they would not attain their operating profit goals they had set early this year.
The surveyed companies also replied that their investment environment has worsened as compared to the previous year. To the question on the investment trend for this year compared to last year, 31 percent of the respondents answered that it has aggravated, about three times more than those (11 percent) that replied it has been better. The remaining 59 percent replied that they saw there was no difference.
Further, the Korean economy on the whole, compounded by a slow global economy, has been in a tough spot. The Brookings, a think tank based in the United States, and the Financial Times, the U.K.-based newspaper, released the Tracking Indexes for the Global Economic Recovery (TIGER) on Oct. 13 (local time). According to TIGER, the global composite indexes recorded 0.4428 as of August this year, the lowest in three years since they stood at negative 2692 in May 2016.
The composite index for South Korea in particular stood at -7.5127 as of August, the lowest in 10 years since it hit -9.0215 in January 2009. The country saw other indexes for its real economic activities, financial market, and investors’ confidence falling together.