Uncertain Domestic Economy for Next Year

Companies have been worried about the business before a new year. In foreign countries, the US economic index moves back and forth. There are unfavorable factors such as the increasing household debts at home.

Samsung Economic Research Institute warned on December 4, “Through the report of ‘real facts and assignments of Korean companies’ competitiveness, the domestic and foreign circumstances are very uncertain until the first half of 2003. Companies must get through the period well.”

This institute analyzed, “Because of a spread of terror, possibility of US-Iraq War and delayed recovery of IT business, the world economic fear has been continued. Before a presidential election, there is a similar social atmosphere to the financial crisis of the end of 1997.”

The actual uneasiness of companies has been gradually larger. The high official of Samsung Electronics said, “There was an expectation that the business would be recovered. However, the business conditions for next year are uncertain.”

Kim Yeong-Su, vice-president of LG Electronics said, “As the foreign business conditions are uncertain, it is difficult to make the business plan for next year. We will maintain a conservative basis except a necessary investment”

Besides, investigated for 600 companies on the basis of sales by industry by the Federation of Korean Industries, ‘business survey index (BSI) of December’ is 95.6 decreased over 98.6 of last month. When the BSI is less than 100, many companies forecast that the economy of the month will be worse than one of last month. A manufacturing business (88.8) is less than the non-manufacturing industry (113.1) and the exports (99.5) is less than the domestic demand (106.0).

Yu Jae-Jun, head of economic investigation team of the Federation of Korean Industries analyzed, “As the US economy has been uncertain and uneasy and the domestic economy has many risk factors such as the increase of household debts, bubble of real properties, increase of short term foreign loans and the coming maturity of public funds’ repayment, companies have been worried about the business.” Experts indicated, “Companies will have to maintain a consciousness of crisis for many years. The government must decrease the external uncertainty of the economy to make a soft landing of the business.”

Yeon-Su Shin ysshin@donga.com