South Korean manufacturers' business confidence for April inched down as rising oil costs and Japan's quake are expected to increase economic uncertainty, the central bank said Thursday.
The index of manufacturers' outlook on business conditions reached 95 for April, down from 96 for March, according to the Bank of Korea (BOK). The index measures manufacturers' outlook on business conditions for the coming month.
The sentiment index stayed below the benchmark 100 for the seventh straight month, indicating that pessimists outnumber optimists. The index is based on a nationwide survey of 2,481 companies conducted between March 17-24.
"Local manufacturers picked gains in raw material prices and uncertain economic conditions as the main stumbling blocks in doing business," said Son Won, an economist at the BOK.
"Some of them expressed concerns that Japan's devastating quake may constrain parts imports from the country."
But the index measuring manufacturers' assessment of current business conditions reached 93 in March, up from 88 in February and the highest level since October last year, the BOK said.
A sub-index gauging the outlook for purchasing prices of raw materials came in at 142 for April, up from 137 for March and the highest level since 157 for August 2008.
South Korea is facing growing inflationary risks as the economic recovery and rising raw material prices are exerting upward pressure on consumer prices.
The BOK forecast that South Korea's economic growth will slow to 4.5 percent this year, down from a 6.2 percent expansion last year. But it raised its inflation projection for 2011 to a three-year high of 3.5 percent from a 2.9 percent advance last year.