Bipolarized industrial outlook for 2H

¡°Bright picture for semiconductors, shipbuilding and info-communications, but gloomy outlook for textiles and constructions.¡±

The nation¡¯s three major industries such as info-communications, semiconductors and shipbuilding are expected to see continued growth, while other industries including automobiles, consumer electronics, machineries, steel and petrochemicals will likely suffer slowdown in the second half of this year.

In a report of industrial outlook for this year¡¯s latter half recently released, the Samsung Economic Research Institute said that last year¡¯s robust growth that most industries enjoyed was partly due to the comparison with the weak economic activities in 1998, and an industrial bipolarization is expected for the second half.

The report forecast that the info-communications industry will enter a stable growth phase in line with somewhat slowed expansion in exports and production. In particular, with regarding to the government¡¯s selection of IMT-2000 service providers slated for the second half, the industry is anticipated to witness a far-reaching reconfiguration through mergers and acquisitions.

On the semiconductor side, exports in this year¡¯s first half showed a year-on-year gain of over 30%, encouraged by continued sharp increase in demand since the second quarter of this year, coupled with soaring semiconductor chip prices. The second half also will post strong demand exceeding supply. Notably, strong movements of chip prices are likely to lead production and exports to a health year-on-year increase of more than 20%.

However, the SERI warned that the current semiconductor boom should give rise to worldwide facility expansion, thus heavily falling on the industry around 2003 or 2004. In addition, oversupply in the global DRAM market will cause a negative growth in the next three or four years, the report noted.

On the automobiles front, recovery in the overall domestic economy has boosted both domestic demands and exports in the first half. In the second half, however, domestic demand growth is projected to be slowed down in the 5% range, largely hit by weakened economic growth, coupled with high oil prices and scheduled LPG price hikes. Exports also will suffer a loss of 7.4% from a year ago, primarily due to stagnated demand from the advanced countries.

On the other hand, steel and petrochemical industries are expected to witness slower growth. And despite a favorable expectation in the wake of improving inter-Korean relations, the construction sector will not likely see a growth soon, because the investment scale in the social overhead capital is so heavy.

The SERI report stressed that voluntary, quality-oriented restructuring, as well as cooperation and coalitions in the private sector are required, since it is hard to draw a rosy picture for the overall industrial outlook in this second half.