Rising Trend Of Economy Weakened

Enterprises prospect that economic situation would be alright after June; too, however rising trend would shrink a little.

Following survey of main economic agencies like Korea Chamber of Commerce and Industry, the Federation of Korean Industries and minor company cooperative association on 2nd, companies prospected that favorable tone of domestic consumption, increase in exports and recovery of facility investment would continue in June, too.

However, as U.S economic recovery is not reaching expectation and value of won is rapidly rising (sudden fall in won-dollar exchange), successive rapid rise of economy would be difficult, they expected.

FOKI stated on 2nd that prospect of BSI, which it investigated targeting 600 companies by standard of sale amount was 121.8.

If monthly BSI surpasses 100, companies expecting economy to become favorable than last month are more than companies which expect it to become worse.

Survey of FOKI, BSI has shown above 100 for seven months since last December.

However, it showed sudden rise which is above 140, in March~May, but it fell into 120 line this month.

According to industry, transportation (152.4), IT (133.3), paper (138.5) were expected to prosper following World cup and local elections, on the contrary, Oil (50.0) and Electricity and Gas (83.3) were expected big fall as it is non-season.

SBHI, which MCCA surveyed targeting 1500 small companies was also 107.5, which fell down from 116.6 of May, therefore, it is expected that continuing rapid rising trend of economy would be difficult.

SBHI is an index to subdivide BSI weighing on each industry.

Especially, SBHI of May, achievement of small manufacturing companies was 100.7 due to stagnation of stock market and strong trend of won, and it was quite below than the expectation of May.

Achievement of small companies in May was lower than expectation in most items like production, domestic sale, exports and ordinary profit.

Small manufacturing companies pointed out the biggest obstacle in management in May were difficulty in securing manpower and they prospected that it would be continued, as SBHI was 75.5 percent.

On the other hand, BSI in 3/4 quarters, which KCOCI surveyed targeting 1485 manufacturing companies is totalized 125, which dropped from 133 in 2/4 quarters.

544 companies (37.3 percent) expected that 3/4 quarter economy will become better than 2/4 quarters, among respondent companies and 707 companies (48.4) expected that it will be same as 2/4 quarters, and 209 companies expected it to be worse.

Yeon-Su Shin Byong-Ki Lee ysshin@donga.com eye@donga.com