SEOUL, June 25 – South Korean business sentiment continued to worsen on concerns over the United States exit from quantitative easing and slowing manufacturing activities in China, a business lobby survey showed Tuesday.
Business survey index (BSI) for July, a gauge of business environment outlook for the upcoming month, fell to 90.7 from 97.2 in June, according to the survey of 600 largest corporations by sales taken by the Federation of Korean Industries (FKI).
China’s Xinhua news agency reported the figure declined for four straight months after peaking at 104.4 in March, and it stayed below the benchmark 100 for the third consecutive month. A reading below 100 means pessimists outnumber optimists.
The dim outlook among companies stemmed from concerns over the scale-down of bond purchasing programme in the US and downturn manufacturing data in China.
US Fed Chairman Ben Bernanke (photo) said last week that it may begin reducing the pace of bond purchases later this year before bringing it to an end by the middle of next year. China’s manufacturing Purchasing Managers’ Index (PMI) for June declined to 48.3, the lowest since September last year and down from 49.2 in May.
“Reduction in the US quantitative easing will pour cold water on global recovery as it is hard to say that the US economy went back to the clear recovery track,” said Kim Yong-ok, head of FKI’s economic policy team.
Kim noted that signs of slowdown in the Chinese economy, which accounts for a quarter of South Korea’s exports, made the business confidence gloomier, adding that private consumption also showed signs of weakening.
– BERNAMA
