Korea's manufacturing sentiment hits near 5-year low

SEOUL, Oct. 31 (Yonhap) -- South Korean manufacturers' confidence for November dropped to the lowest level in nearly five years as companies expected a global economic downturn to hurt their business, the central bank said Friday.

The business survey index (BSI) for manufacturers' expectations declined to 65
for November, compared with 78 the previous month, according to the Bank of Korea
(BOK).
The figure is the lowest-ever since the central bank began to compile related
data on a monthly basis in January 2003, it said.
A reading below 100 means pessimists outnumber optimists. The nationwide survey
of 2,929 companies was conducted from Oct. 17-24.
"The November BSI for manufacturers dropped mainly because companies expected
business uncertainty following global financial jitters to persist," said Jang
Young-jae, a BOK official. "They also had a gloomy outlook as a global economic
slowdown is feared to hurt exports."
South Korea's stock and currency markets have undergone severe fluctuations in
the past few weeks, hit by the Wall Street-triggered financial crisis.
The local currency tumbled to a 10-year low against the U.S. dollar on Monday,
increasing its accumulated loss to nearly 35 percent so far this year. Also, the
country's key stock index, the KOSPI, tumbled more than 25 percent this month as
foreign investors continued to sell off local stocks.
The survey results come as South Korea's economy is facing a downside risk. The
economy, Asia's fourth-largest, is losing steam on faltering domestic demand. It
expanded just 3.9 percent in the third quarter from a year earlier, the slowest
pace since 2005 and down from 4.8 percent growth in the second quarter.
On Monday, the central bank slashed its key interest rate by 0.75 percentage
point, its largest ever rate cut, to 4.5 percent in a bid to prop up the falling
economy and restore the crumbling financial market.
sam@yna.co.kr
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