Survey puts N.K. nuclear issue at bottom of business concerns
South Korean firms predicted that the foreign exchange rate would be the key variable to watch in predicting the health of the nation’s business environment in 2007. According to a report on the prospects for the 2007 business environment, released by the Federation of Korean Industries (FKI) on January 2, about 44.1 percent of domestic companies mentioned the foreign exchange rate as a key variable for this year’s economy, followed by the price of oil and raw materials (21.7 percent), the government’s economic policies (14.8 percent), and the upcoming presidential election (12.8 percent). Very few cited the direction of the U.S. and Chinese economies (5.3 percent) and the North Korean nuclear issue (1.3 percent) as being areas to watch in terms of South Korea’s business environment in 2007. The survey was conducted on 328 companies out of the country’s top 500 companies in terms of sales. Regarding prospects for business conditions this year, 38.7 percent said they would be similar to those of last year, and 36.6 percent replied that conditions would be even worse than last year’s. About 24.7 percent thought the business environment would improve slightly.About the results, the FKI said, "Many firms were pessimistic regarding this year’s economy due to various factors, such as a stronger won, oil and raw materials prices, and the upcoming presidential election." In the meantime, the firms thought that to secure profitability, the proper exchange rate should hover at about 948.2 won per dollar, and the oil price per barrel should be around US$57.80. Almost 55.0 percent of the companies surveyed set a target to increase sales over the previous year by one to 10 percent. Regarding investment, 39.6 percent of the surveyed firms also plan to increase their rates by one to 10 percent over the year prior, while 27.8 percent said they would maintain the previous year’s level. As for employment, 44.3 percent of the companies said they would maintain last year’s levels, with 38.0 percent saying they would increase employment by one to 10 percent. Please direct questions or comments to [englishhani@hani.co.kr]
