Home > Monthly BSI
2017. 2. BSI - BSI for February
Fiscal&Financial Policy Team
2017-02-03
<BSI for February>

Business survey index hits 12-month low for February


   The nation's business sentiment keeps on worsening. The Business Survey Index (BSI), a survey of the nation's top 600 companies in terms of sales conducted by the Federation of Korean Industries (FKI), came in at 87.7 for February, hitting a 12-month low. A BSI reading below the break-even 100 mark means pessimists who are delivering a gloomy prediction of their business outnumber optimists.

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'16.2
3
4
5
6
7
8
9
10
11
12
'17.1
2
General Business
(Prospects)
86.3
98.3
95.7
102.3
94.8
90.5
89.5
95.0
96.0
89.8
91.7
89.9
87.7
General Business
(Performance)
87.0
94.2
97.3
97.1
91.3
89.7
90.0
92.0
89.0
91.0
91.1
89.2
-


   The index for the actual business performance stood at 89.2, sinking under the break-even 100 mark for as many as 21 months in a row since it recorded 101.3 for April, 2015. Obviously, this is a warning sign for corporate growth. As a matter of fact, corporate sales showed huge fluctuations (23.2% in 2008 → 2.0% in 2009 → 19.0% in 2010) after the global financial crisis, eventually registering a negative growth since 2014.

   External and internal variables that influence the economy are also thought to be adverse. A poor private spending appears to bring about a steady slump in domestic demand while precariousness in Korean society continues. On top of this, the economy is likely to face a slew of adverse factors, including mounting protectionism as evidenced by a recent move of the incoming Trump administration and an announcement by the British prime minister aimed at pursuing the so-called 'Hard Brexit' and a series of interest rate hikes in 2017 as projected by the Fed. in the U.S. Destined to fight against such odds, domestic firms find it really hard to come up with investment plans for the new year.

   An FKI official expressed concern that with uncertainties growing bigger and bigger at the outset of the new year, businesses keep failing to regain their confidence. "It clearly means a huge warning sign is up ahead," he added.

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