Korea: Business confidence steadies in June
May 31, 2017
In June, the Bank of Korea’s forward-looking business confidence indicator (BSI) for the manufacturing sector was steady at May’s level of 84 points, thereby remaining at the highest reading since May 2014. That said, the indicator remains below the 100-point threshold and signals pessimism among the majority of Korean businesses.
Looking at the results in detail, business sentiment among export-orientated firms increased for the second consecutive month on the back of a strong external sector. Moon Jae-in’s election victory at the 9 May presidential elections also played its role as he vowed to ease geopolitical tensions. Despite remarks by President Trump to review the free trade deal with Korea, uncertainty about policies in the U.S. did not daunt business sentiment among export-orientated businesses this month.
Among domestic-oriented businesses, sentiment decreased slightly in June. Korean manufacturers felt more optimistic about profitability but less positive regarding sales, raw material purchase prices and sales prices. While volatility in the currency market has become less of a worry, weak domestic demand remains a hazard to the Korean economy.
Author: Jan Lammersen, Economist