SMALL BUSINESSES STRUGGLE TO STAY AFLOAT

[Anchor Lead]

Concerns on an economic recession is sill dominant among people in the New Year as it directly impacts the livelihood of the people. However, prospects aren't looking so bright this year as well. The economic slowdown seems to be continuing, and the high-inflation and soaring interest rates will inevitably have an impact on small businesses and the self-employed the most.

[Pkg]

It's dinnertime, when this roasted pork restaurant is supposed to be crowded. But on this day it looks deserted. Rarely has this place struggled like this since opening 22 years ago. Few customers were willing to dine out during the pandemic, but even after the COVID-19 restrictions were lifted the restaurant struggled to recover its sales, which remain low due to inflation.

[Soundbite] Chung Dong-kwan(Restaurant owner) : "We're not receiving any reservations or inquiries for corporate dinners. Families no longer come to eat out. Consumer sentiment is at its worst."

One Americano at this cafe costs 2900 won. Prices of imported coffee beans have doubled from pre-pandemic levels because of high exchange rates. Prices of other supplies such as paper cups are also rising, adding to small businesses' financial woes.

[Soundbite] Ko Jang-soo(Cafe owner) : "Only importers are exempted from tariffs, but that's not reflected in market prices at all."

Skyrocketing interest rates on loans make the situation especially tough for the self-employed. The owner of this convenience store pays 1.2 million won in monthly interest alone. Although the rent stayed unchanged, sales have diminished from the time when COVID restrictions were in place. Soaring interest rates and labor costs make the survival prospect for this place especially bleak.

[Soundbite] Lee Ho-jun(Convenience Store owner) : "I'm afraid to watch news about the economy these days. Every time I hear about yet another interest rate hike in the U.S., I just sigh."

Last year loans received by small businesses surpassed 1000 trillion won for the first time. Loans received from non-bank lenders have increased exponentially. The Bank of Korea says some 110,000 self-employed people could be faced with financial insolvency by the end of the year if loan rates rise further, sales recover slowly and the government halts funding for loan interest payments.