Seoul, South Korea – A recent survey conducted by the Korea Federation of SMEs has revealed a dire outlook for South Korea's small businesses. With 95% of respondents anticipating that their business conditions will either deteriorate or remain stagnant in 2023, the sector is facing its most challenging year in recent memory.

The survey, which polled 800 small business owners across various industries, highlighted the primary challenges faced by these enterprises. Soaring prices of raw materials and ingredients emerged as the most significant concern, followed by declining domestic demand, mounting debt burdens, and difficulties in recruiting and retaining employees.

Despite the economic headwinds, many small businesses have turned to online platforms to mitigate the impact of the downturn. However, the survey revealed that a substantial portion of businesses are struggling to meet their loan repayments due to high-interest rates. In fact, 93.7% of respondents reported feeling burdened by loan repayments, with an average interest rate of 4.99%.

When asked about the most pressing policy issue, a resounding 80.8% of respondents called for increased financial support. Specifically, small business owners are urging the government to implement measures to alleviate the burden of high-interest rates and address the labor shortage.

"The combination of high inflation, high interest rates, and political uncertainty has created a perfect storm for small businesses," said Choo Moon-gap, head of the economic policy division at the Korea Federation of SMEs. "To address the challenges faced by these enterprises, it is imperative for the government to stimulate domestic demand and implement policies to reduce interest rates."

The bleak outlook for South Korea's small businesses underscores the urgent need for government intervention to support this vital sector of the economy.