The Korea Herald

지나쌤

Korean firms expect difficult financial situation in Q1: poll

By Korea Herald

Published : Jan. 11, 2012 - 18:16

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South Korea’s businesses are bracing for unfavorable financial conditions in the first quarter of this year, mainly due to sluggish economic growth and falling sales and profits, a poll showed Wednesday.

The survey of 500 companies by the Korea Chamber of Commerce and Industry showed the business survey index on corporate finance dropping to 79 for the January-March period from 92 three months earlier.

It is the lowest reading since the organization started taking the poll in the third quarter of 2009, with the index falling on-quarter for the third straight quarter.

The FBSI stood at 102 in the second quarter of 2011 before falling to 97 in the following quarter. A reading below 100 means pessimists outnumber optimists.

The KCCI said 65 percent of companies surveyed blamed a projected drop in sales for their bad financial conditions with a rise in production costs and a drop in profits all being cited for contributing to hard times.

Small and medium enterprise are expected to feel the pinch more than conglomerates, with non-manufacturers forecasting more harsh times compared to manufacturers.

Companies also said they expected trouble raising fresh funds for their operations with high interest rates being cited as the principle source of concern.

“Just under 79 percent of companies cited interest rates as a source of worry in the first quarter,” the report said.

Related to such developments, the country’s largest business organization with over 135,000 members, called on the government to reflect such concerns in its macro economic plans, and to ease restrictions on loans extended to SMEs. 

(Yonhap News)