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Business sentiment among South Korea’s small and midsized enterprises (SMEs) is expected to improve in the second
quarter (Q2) this year, showed a study.
SMEs’ business sentiment index (BSI) outlook for Q2 this year logged well above the baseline (100) at 113, reflecting
SMBs’ optimistic business sentiment for the upcoming quarter unlike that in Q1 (90), according to a survey conducted by the
IBK Economic Research Institute under the Industrial Bank of Korea (IBK) of 3,070 small and mid-size manufacturing firms.
SMEs’ business sentiment picked up due largely to signs of recovery in the U.S. economy, stabilized situations in the
Eurozone debt crisis, and a turnaround in Korea’s major economic indicators such as exports, the institute estimated.
By company size, the index rose over 20 points from the previous quarter for both small-sized and mid-sized companies.
The BSI outlook of small manufacturers climbed from 88 in Q1 to 110 in Q2, and that of mid-size companies rose from 97 to 123 in Q2.
By category, SMEs’ BSI outlook for orders received, domestic demand, and exports gained 23 points, 21 points and nine ints, respectively, from the previous quarter, reflecting the companies’ upbeat forecast for business conditions.
However, most SMEs expect that their capital financing conditions and profitability would not improve indicating their continuing concerns over low profitability.
‘Sluggish domestic market’ and ‘a rise in raw material prices’ are cited as SMEs’ major management problems.
The survey result reflects the current business conditions in which more SMEs suffer from sluggish demand in the domestic market and higher oil prices.
“Business sentiment of SMEs for Q2 improved to some degree due largely to the base effect from weak business conditions in the previous quarter and alleviated external uncertainties,” an IBK Economic Research Institute official said.
“However, actual economic conditions will not turn around dramatically as uncertainties are still lingering over the continued slump in domestic demand, the contracting real economy in the Eurozone, and soaring oil prices.”
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