Different Economic Picture for Each Industry Next Year

“Good news for the electronic and semiconductor industry, but bad news for textile, steel, and oil industry.”

The Korean Chamber of Commerce and Industry (KCCI) revealed its survey results involving 10 major industries association on the “economic prospects for 2004” on Thursday, warning, “The economic outlook for most of the sectors is gloomy except for the electronic and semiconductor sectors.”

The economic growth rates for the textile, construction, and oil industries in particular are expected to slow down mainly because of the cash-strapped card industry, growing uncertainties in employment, and possible downturn of the real estate markets.

With regards to industries catering to domestic needs, the electronic and general machinery sectors are forecasted to grow 10.2 percent and 7.5 percent, respectively, compared to this year, since a number of people are expected to replace their digital devices with new ones next year.

The semiconductor, electronic, and general machinery exports will increase 20 percent, 15.9 percent, and 12.5 percent, respectively due to U.S.’ information technology (IT) parts’ revival and surging demand from China and European markets.

The auto industry, which saw an increase of 16.8 percent in exports this year, will grow by a disappointing 1.5 percent due to the strong won and possible overseas trade pressures. However, the industry expects to see domestic demand grow to a positive 15.2 percent, which is a drastic upturn compared to last year’s negative growth rate of -18.6 percent. A variety of new models, which will be introduced to the markets next year, will contribute to its increase in domestic market.

The steel industry, which enjoyed a substantial growth rate this year, is forecasted to increase by only 1.8 percent in production and 0.5 percent in domestic demand. The possible shortage of raw materials and downturn of construction sector are cited as the main reasons for the recession. As China is prospected to grow significantly next year, the steel industry in South Korea will run short of raw materials.

The oil industry is also forecasted to slow down due to unsteady oil prices. Furthermore, as a rapid transit railway is opening, the oil demand will fall further. The construction sector, which saw double digit increase this year, will see a 9.5 percent decrease due to weak demand for the private housing sectors. The growth rate of textile sectors is expected to fall by 3.5 percent in production and 9.8 percent in domestic demand as cheap products and high-quality imports increasingly dominate the domestic market.

Na-Yeon Lee larosa@donga.com