It has been forecast that the steel, shipbuilding, and construction industries currently in recession will get better in the fourth quarter this year.
The Korea Chamber of Commerce & Industry (KCCI) and nine other associations including the Korea Electronics Association and the Korea Automobile Manufacturers Association conducted an industry survey and presented the results on October 9. The results for three industries in recession including steel, shipbuilding, and construction have raised from a majority estimate of “rainy” to just “cloudy” for Q4. The survey by KCCI is presented as a chart showing business forecasts analyzed from domestic and international positive and negative causes for Q3 through Q4 per industry. “Sunny” means the industry is doing good business, “slightly cloudy” is average business, “cloudy” is slightly slow, and “rainy” is a recession.
The steel industry faced critical difficulties in Q3, even causing power-saving actions. However, as the shipbuilding and construction industries are likely to pick up in Q4, and along with the substitution of imports following Hyundai Steel’s increase of equipment, it will get back on track. Their obstacle is that 60% of the world’s oversupply of steel is concentrated in Korea, China, and Japan.
As for the shipbuilding industry, the recent shortage of ships and increase in demand for early betterment and replacement of ships built in the 1990s will make things better in Q4. The construction industry also expects business to improve as the number of home buyers increases, causing redevelopment and reconstruction in the Gangnam area.
The information and communications industry has been selected as the “sunniest” in Q4, as it was in Q3, thanks to Samsung and LG continuing to release smartphones, provide LTE-A services in advanced countries, and fulfill constant demands for system semiconductors and smart TVs.
Automobile and petrochemical industries also received a “slightly cloudy” rating, meaning that their businesses will be average. Some point out that the troubles in production and export caused by Hyundai and Kia labor union strikes in Q3 were unfortunate. In Q4, with Kia’s Gwangju factory production line operating, business will be good.
The mechanical and fabric industries improved from “cloudy” in Q3 to “slightly cloudy” in Q4. As for the mechanical industry, the construction business and capital investment were the main factors for improvement. The fabric industry will improve, mainly due to the Gaeseong Industrial Complex resuming operation and increased fabric demands from Southeast Asian countries. The oil refining industry will continue to be “cloudy” in Q4 as it was in Q3.
KCCI Director Park Jong-gab said, “Although things are looking better each day for the steel, shipbuilding, and construction industries which recently suffered a recession, without the base effect, the recovery momentum is still weak, and considering outside factors such as the US shutdown and China’s economic recession, we cannot be too sure.” He added, “The government should more strongly pursue economic revitalization and carefully consider the impact on industries when trying to pass any new legislation.”