By Kim Yon-se
Staff Reporter

Despite a bright economic outlook from Chong Wa Dae and policymakers, more and more producers predict the economic downturn will continue with the slump moving onto the export sector.
Exporters, the main powerhouse for the economy, have become pessimists, though the nation’s export growth posted more than 25 percent during the first half of the year, with the business outlook index for the export industry staying well below the benchmark 100.

In its latest business survey of 2,485 manufacturers nationwide on Tuesday, the Bank of Korea (BOK) reported that the business survey index (BSI) outlook for exporting companies stood at 77, the lowest in 12 months since the 74 reported in August 2003.

The outlook index reached 98 in May, but continued to fall over the past three months _ 86 in June and 84 in July _ according to the central bank. A BSI reading of 100 or lower indicates that the majority of respondents are pessimistic about business conditions.

Furthermore, the BSI outlook for domestic demand-oriented companies fell to the lowest mark in 43 months, recording 71, since it stayed at 61 in January 2001.

``As the nation’s economic growth depends heavily upon exports, domestic demand is more sensitive to export income,’’ BOK official Oh Ji-yoon said.

This month, the BSI, measuring the business outlook of both export and domestic-focused manufacturers, stood at 73, its lowest mark in 12 months since it posted 72 a year ago.

Conglomerates were still less pessimistic about their financial health than small- or medium-sized enterprises (SMEs) for August, with the BSI outlook standing at 78, higher than 71 for SMEs.

About 34 percent of the 2,485 respondents cited slackened domestic demand for the business downturn, while 18 percent and 14.9 percent blamed surging prices of raw materials, including oil, and economic uncertainties.

As world’s oil prices soared to the record high at the end of July, manufacturing business sentiment will likely worsen over the next few years, the BOK forecast.

BOK economists said export growth will measure 14.5 percent in the latter half, compared with 27.4 percent growth in the first half.

Non-manufacturing firms also predicted that business conditions will deteriorate in the coming months, with the outlook index for August plunging to 64 from 71 in July.

kys@koreatimes.co.kr