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South Korean businesses see negative sentiment for 4th month, except semiconductors
🇰🇷 South Korea /Technology

South Korean businesses see negative sentiment for 4th month, except semiconductors

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Documents & data Context piece
  • South Korean businesses anticipate a downturn in economic sentiment for July, marking the fourth consecutive month of negative outlook.
  • The semiconductor industry is experiencing a boom due to AI, but most other manufacturing sectors face challenges from high oil prices.
  • Non-manufacturing sectors and exports show positive sentiment, with the latter's positive outlook continuing for two months, a rare occurrence in nearly five years.

South Korean businesses are bracing for a continued negative economic outlook in July, with the Business Survey Index (BSI) forecast at 98.0. This marks the fourth consecutive month where the BSI has fallen below the 100-point threshold, indicating more companies expect worsening conditions than improving ones.

The stark contrast between industries highlights a bifurcated economy. While the semiconductor sector is thriving on an unprecedented AI-driven boom, most other manufacturing industries are struggling. The BSI for manufacturing stands at 95.6, a significant drop from 101.7 in the previous month. This downturn is attributed to the persistent burden of high oil prices, which have not eased despite some global oil price uncertainties being mitigated.

The recent domestic economy has shown strong recovery, but many manufacturing sectors, excluding specific industries like semiconductors, are facing continued difficulties.

— Lee Sang-hoLee Sang-ho, head of the economic division at the Korea Economic Association, commented on the mixed economic outlook.

However, the non-manufacturing sector offers a glimmer of hope, with its BSI forecast at 100.6. This marks the first positive outlook in seven months, largely driven by expectations of a strong summer vacation season boosting industries like leisure, accommodation, and food services. Furthermore, the export BSI has remained positive for two consecutive months at 100.6, the longest such streak in nearly five years, suggesting continued strength in international trade.

Despite these pockets of optimism, sectors like investment (95.5), domestic demand (96.9), and employment (94.9) remain below the 100-point mark, signaling ongoing concerns. Lee Sang-ho, head of the economic division at the Korea Economic Association, emphasized the need for supportive policies and measures to facilitate corporate financing to help struggling manufacturers.

We need to strengthen support measures to boost corporate vitality and expand channels for financing.

— Lee Sang-hoLee Sang-ho, head of the economic division at the Korea Economic Association, stressed the need for government and industry support.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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