Corporate confidence in South Korea hits 23-month low

Business sentiment among South Korea's companies has fallen to its lowest level in 23 months, as worsening business conditions mainly in the non-manufacturing sector have lowered consumer sentiment due to high inflation and the reeling real estate market.

The Bank of Korea on Wednesday announced its business sentiment index (BSI) for this month, saying the BSI for all sectors was 75, down from 76 last month. This was the lowest figure since 75 in December 2020, when the nation was in the grip of the COVID-19 pandemic, and the index's third straight month of decline.

A BSI of over 100 means more companies are upbeat over business conditions and one under 100 signals that more businesses are pessimistic over their prospects.

Business sentiment in manufacturing improved but that of the non-manufacturing sector worsened. The BSI for manufacturing this month was 74, up two points from last month, but that for the non-manufacturing sector was 76, down three points. The figure for wholesale and retail fell five points to 75 due to reduced consumer sentiment and that of construction to 64, its lowest level since 60 in September 2020.

The projected BSI next month for all sectors was 74, down two points from this month and the worst since 70 in January last year.

Write to Mi-Hyun Jo at mwise@hankyung.com