Invest KOREA

According to Yonhap News,

(SEOUL = Yonhap News) More than half of the executives of Korean businesses expect both domestic and global economies to show signs of recovery, a survey showed on Monday.

It is the first time since 2011, when Korean business executives took part in the survey, that more than 50 percent of the respondents showed positive expectations for the Korean economy.

However, confidence about the profits and financing of businesses worsened compared to last year.

The survey, known as EY Capital Confidence Barometer, was conducted by the global accounting & consulting firm EY (previously Ernest & Young) at the end of 2013 targeting 1,600 executive members in 72 nations. The outlooks about the Korean economy were the results of an analysis of responses by 51 executives of Korean businesses.

According to the analysis results, 53 percent of the surveyed executives said that the country’s economy is on the way to recovery.

This is significantly higher than the 27 percent in the survey carried out at the end of 2012 and 31 percent in April of 2013.

The study revealed that 41 percent of the respondents expected business conditions to remain unchanged from the year before, with only six percent believing conditions will worsen.

The respondents also showed similar expectations over the global economic trend. Fifty-three percent of them expect the global economy to improve, while 43 percent said it will remain unchanged from the year before and four percent said things will worsen.

Among the respondents, 61 percent said the country will record a 1~3 percent economic growth rate in 2014, while 29 percent expected a 3~5 percent growth rate. Eight percent of the respondents said the country will record a zero growth rate, and two percent forecast a negative growth.

In April of 2013, 68 and 24 percent of the respondents said the country will record a 1~3 and zero percent economic growth rate, respectively. However, the number of respondents expecting a 3~5 percent growth rate has dramatically increased, from four percent in April 2013 to 29 percent in 2014.

Fifty-one percent of the respondents said they plan to hire more employees in 2014. The percentage has dramatically risen from 16 percent in 2012 and 37 percent in April 2013.

Meanwhile, only 13 percent of the respondents are willing to invest more than 25 percent of their capital in emerging markets other than BRICs, and more than half plan to invest in developed nations and BRICs.

Only 39 percent of the respondents were confident about profits, down by 28 percent from 67 percent at the end of 2012. Confidence about credit availability has also dramatically fallen from 56 percent in 2013 to 35 percent.

Thirty-seven percent of the respondents said that the debt-equity ratio of their businesses lies between 50 and 74.9 percent, which indicates that the businesses experienced an increase in debt-equity ratio, as only 18 percent selected the range in April of 2013.

The executives responded that the biggest risks that will threaten economic growth in 2014 are the reduction of quantitative easing by the United States (60 percent), the Eurozone crisis (16 percent), international political instability (14 percent) and China’s slower growth (10 percent).

In terms of the mergers and acquisitions (M&A) market, 57 percent of the respondents expect Korea will see more M&A throughout the year, and 67 percent said that the number of global M&A is also likely to increase in 2014.

However, only 16 percent of the respondents are likely to carry out M&A in 2014, which is down by more than 50 percent, from 31 percent last April.

Among the respondents, 40 percent said they will focus on growth strategy rather than improve efficiency or stability, and 66 percent of them are willing to invest excess cash for the organic growth of businesses.