Biz conditions feared to be worse early next year

Domestic companies fear that business conditions in the first quarter of next year may reach a level similar to that seen immediately after the foreign exchange crisis of late 1997, when the nation was forced to seek a bailout from the International Monetary Fund (IMF).

A survey conducted by the Korea Chamber of Commerce and Industry (KCCI) showed that companies in Taegu will experience an especially severe cash crunch next year due to the downfalls of Samsung Commercial Vehicle and Woobang Co. Those in Inchon were also predicted to suffer as much as they did during the 1997-98 crisis due to the bankruptcy of Daewoo Motor.

The KCCI said Monday that the Business Survey Index (BSI), calculated on the basis of a survey of 1,993 companies nationwide, fell to 63 for the first quarter of next year. The figure marks a drop of 46 points from the fourth quarter of this year, when the index stood at 109. A BSI figure below 100 means that more companies are pessimistic about economic conditions.

The index posted its lowest level of 37 in Taegu, while the figure was 55 in Inchon, whose economy heavily depends on Daewoo Motor. These two cities have registered the lowest BSI figures since 1972, when the KCCI started conducting the survey.

By business category, the indices for textiles, petrochemical products, wood, medical equipment, precision machinery and electronic goods all dipped below 100. Only the office equipment and shipbuilding sectors saw BSI figures of 100 or over.

Ha Im-Suk artemes@donga.com