Economic Concerns

[Anchor Lead]

The business sentiment among South Korean manufacturers has plunged to levels last seen during the 1997 financial crisis in the first quarter of this year. South Korea's economic outlook this year is looking rather gloomy.

[Pkg]

This is a company that has been manufacturing industrial cables for 26 years. The company managed to post sales growth even during the IMF and financial crises. However, at the end of last year, it saw sales slip seven percent for the first time. The company failed to sell its products after its main customer slashed investment in equipment due to worsening business performance.

[Soundbite] Yeon Jang-heum(Dev. Team Chief, Cable Manufacturer) : "With steel industries receiving no orders, related sales have slipped around ten percent."

A slump in consumption is also a serious problem. This processed meat manufacturer lately saw sales plunge 30 percent. The amount of orders remains unchanged even though the Lunar New Year holiday is approaching.

[Soundbite] Employee of Processed Meat Manufacturer(Voice modified) : "We can't produce if goods aren't sold. Without sales, we don't have a source to pay for investment costs or fixed costs."

The nation's economic outlook has become gloomier with investment and consumption, the two pillars of the economy, contracting. A new survey on roughly 2,400 manufacturers found that the business survey index for the first quarter stood at 68, or similar to the level posted during the IMF and global financial crises.

[Soundbite] Lee Jong-myung(Korea Chamber of Commerce and Industry) : "45 percent of firms project that the economy will get worse and that business sentiment will slip to the levels of the IMF and global financial crises."

With bleak outlook for exports as well, concerns are rising that the nation's economic downturn could last for a long period of time.