Nearly 4 out of every 10 major South Korean companies expect their business conditions to further deteriorate in the remainder of the year, while more than 4 in 10 said their H1 earnings fell short of earlier expectations, the outcome of a recent survey released Sunday showed.
In a survey conducted by the Federation of Korean Industries, 38.7 percent of respondents said they expected their annual earnings to fall short of earlier expectations.
The survey was conducted on the country’s top 600 companies in terms of sales, in which 307 responded.
The gloomy outlook apparently follows worse-than-expected performances in the first half.
Out of those surveyed, 41.7 percent said their H1 earnings fell short of earlier expectations, while 25.7 percent said their results had outperformed their targets.
Only 25.4 percent said they expected their annual earnings to exceed earlier expectations, according to the FKI.
South Korean firms have been struggling with falling demand at home and abroad. The country’s exports have dipped every single month since the start of last year.
Also, consumer prices gained 0.9 percent on-year in the first six months of the year, reflecting a prolonged slump in local spending.
The surveyed firms, however, singled out opposition-proposed corporate tax hikes as the most serious potential threat to their business conditions, with 67 percent of all respondents saying a tax increase may lead to a further dip in business activities.
More than 4 out of every 10 respondents said a hike in corporate taxes will likely lead to a drop in their investment and employment, while another 16 percent said it will cause a cut in their overall sales.
“Legislation of new bills that may further limit business activities must be minimized when the economic conditions are already at the bottom, and also when the government itself is out to help revitalize the economy with rate cuts and a supplementary budget,” the FKI said in a press release.
“The government must instead focus on support for efforts to develop new growth engines.”