Six out of 10 companies in Daegu have seen their financial conditions deteriorate recently, a new survey shows.
According to the Daegu Chamber of Commerce and Industry on Monday, 60.3 percent of the 269 local firms surveyed said their financial situation had worsened over the past year. The findings come from the chamber's survey on corporate finances and credit access.
Particularly hard hit was the construction sector, where 78.7 percent of respondents reported deteriorating finances. Retail and service firms came in at 55.9 percent, while manufacturers reported a similar rate of 55.7 percent.
By company size, 79.0 percent of firms with fewer than 10 employees said their finances had worsened over the past year — 31.2 percentage points higher than the 47.8 percent recorded among companies with 300 or more employees.
The most commonly cited cause was falling sales, named by 68.5 percent of respondents, followed by rising raw material and energy prices (66.0 percent), higher labor costs (16.7 percent), delayed payment collection (15.4 percent) and increased interest expenses due to high interest rates (11.7 percent).
By sector, manufacturers pointed most often to rising raw material and energy prices (74.8 percent), while construction firms cited falling sales (73.0 percent) and delayed payment collection (29.7 percent) as their primary pressures.
The outlook for the next six months is equally grim: 58.7 percent of respondents said they expect their financial situation to worsen further, suggesting the burden on local businesses is likely to persist for now.
Local firms are also struggling to secure funding through financial institutions.
Some 50.2 percent of respondents said lending conditions had worsened compared with the previous year, and 60.2 percent identified high interest rates as their biggest obstacle to raising funds.
The most common loan interest rate range reported was 4 percent to below 6 percent, cited by 40.9 percent of respondents, while 19 percent said they were paying 6 percent or more.
In the construction sector, 36.2 percent of firms reported loan rates of 6 percent or higher — well above the 15.1 percent among manufacturers and 11.8 percent among retail and service companies.
The financial strain is spreading across all aspects of business operations, including procurement, capital investment and production.
When asked which area had been most affected by deteriorating financial conditions, 48.0 percent of respondents cited procurement, followed by facility and equipment investment (39.8 percent), production (35.3 percent) and workforce management (29.0 percent).
As for the policy measures they need most, firms called for expanding the supply of policy-backed financing (39.4 percent), extending loan maturities and deferring repayments (25.3 percent), simplifying application procedures for policy funds (12.6 percent), and lowering guarantee fee rates while raising guarantee limits (11.2 percent).
"Sluggish sales, rising costs and the burden of high interest rates are combining to suppress business activity across the board," said Kim Byeong-gap, secretary general of the Daegu Chamber of Commerce and Industry. "Particularly for the construction sector and small businesses, tangible financial support measures are needed — including expanded policy financing, loan maturity extensions and interest subsidies."
kbj7653@heraldcorp.com
