The Korea Herald


Manufacturers expect better business conditions in 2nd quarter

By Korea Herald

Published : March 29, 2012 - 13:51

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Korean companies expect market conditions to perk up in the manufacturing sector over the next three months after a nine-month slump, data showed Thursday.

According to a survey of 508 local firms conducted by the Ministry of Knowledge Economy and the Korea Institute for Industrial Economics and Trade, the rosy outlook is based on signs of economic recovery in the U.S. and high expectations for the Korea-U.S. free trade agreement.

Manufacturers’ earnings in the first three months of this year dipped from the previous quarter, but are projected to surge in the next quarter, the survey said.

The Business Survey Index has ranged below 100 for the past three quarters, which means respondents expected business to get worse than the previous quarter.

The BSI for the manufacturing sector went from 96 in the first quarter of last year to 101 in the second quarter, 91 in the third quarter, 90 in the fourth quarter and 88 in the first quarter of this year. The BSI projection for the three months to June climbed to 104.

In the past three months, semiconductors were on the upswing thanks to zealous investment plans announced by Samsung Electronics Co. and SK Hynix Inc.

The BSI for semiconductors and electric machinery were 126 and 103, respectively, but the BSI for all the other industries were under 90. Shipbuilding showed the lowest at 75.

The BSI forecasts for the second quarter were over 100 for all the industries except for shipbuilding (80) and nonmetal oil refining (97).

“It is encouraging that the companies are expecting business to pick up when the perceived economy has been stagnant since the second half of last year,” a ministry official said, attributing the optimism to signs of economic recovery in the U.S. and the FTA.

The U.S. unemployment rate has dropped from 9 percent in September to 8.3 percent in February. The Seoul government expects the FTA with the U.S. to increase Korea’s exports by $1.29 billion on annual average for the next 15 years.

“Economic uncertainties still remain, however, with the eurozone fiscal risks, unstable Middle Eastern oil prices and concerns of a slowdown in emerging economies such as China,” the ministry said.

China lowered its economic growth target early this month from 8 percent to 7.5 percent, stressing qualitative growth.

The price of Dubai crude oil has continued to rise from $105.5 per barrel in December to $122.9 per barrel on Monday.

By Kim So-hyun (