By Ryu Jin
Staff Reporter
South Korea’s monthly business confidence index fell below the standard level amid global credit concerns over U.S. subprime mortgage loans, a survey by the Federation of Korean Industries (FKI) showed Tuesday.
According to the country’s largest corporate lobby group, the Business Survey Index (BSI) for February sank to 94.8, down 8.2 points from the previous month’s 103. It is the first time in seven months that the monthly confidence index has plunged below the standard level of 100 points.
The FKI releases the BSI every month through a survey of about 600 local companies. A reading below 100 points means the number of companies forecasting the economy would deteriorate exceeds those expecting an improvement.
``In general, business is expected to fall off in important areas except for investment in February, amid increased uncertainties due to external factors such as the subprime woes, as well as higher oil and grain prices,’’ the FKI said in a report.
The BSI has been heading downward since last October when it reached a peak of 116.3 points. The figure then fell down to 112.4 points in November, 103.4 in December and 103.0 in January, before dipping below 100 in the latest survey.
However, the FKI said that corporate investment remains brisk as there are high expectations among enterprises for ``business-friendly’’ policies from the incoming Lee Myung-bak administration, set to be inaugurated on Feb. 25.
Lee, a conservative leader who once served as a corporate chief executive, has pledged to alleviate or even eliminate various regulations and restrictions on businesses as part of efforts to reinvigorate the economy.
Concerns over high crude oil prices and the increase in prices of raw materials have cast dark clouds over the South Korean economy. South Korea, Asia’s third-largest economy, is heavily dependent on exports to the U.S., the world’s largest economy.
Worries that the troubled U.S. economy might bring about a global economic slowdown have also prompted the country’s stock market to tumble in recent weeks. Government officials said that they would funnel cash into the financial system if the situation worsens.