Economic Recovery
Various Korean industries are seeing an unexpectedly favorable turn despite concerns over sluggish performance due to the weak yen and strong won since late last year, Chinese manufacturers’ price dumping, and the slump in the domestic economy.
Leading Korean companies are coming up with greater-than-expected Q1 business records these days, including Samsung Electronics, SK Hynix, LG Display, Hyundai Motor Company, Kia Motors, and several oil refiners and steelmakers. The favorable trend is predicted to continue to the second quarter and the latter half of this year, too.
According to the Korea Trade-Investment Promotion Agency (KOTRA), U.S. automakers and primary vendors are increasing their orders for auto parts manufactured by Korean firms and their overseas investment and production are expected to be stepped up amid the recovery of the global car market. “It is sure that Korean carmakers will produce more vehicles abroad down the road,” said a representative from Hyundai, adding, “As such, Korean auto parts manufacturers would be well advised to enter overseas markets at a more rapid pace.” The average export price of Korean-made vehicles is on the rise as well.
In the meantime, the petrochemical industry is forecast to benefit from the facility shutdown by foreign rivals. Middle Eastern and Asian companies are currently proceeding with regular maintenance on a large scale to result in a significant decrease in petroleum supply. The demand is showing a steady increase nowadays, which means Korean petrochemical firms can have an opportunity for sales expansion and profitability enhancement.
The display sector, which suffered from a drop in price and sales for a while, is regaining vitality too. As an example, LG Display has recently raised its facility operation rate to slightly below 100 percent with electronics appliance manufacturers piling up their stocks in preparation for the Brazil World Cup and the Asian Games scheduled for H2. The recovery of the sector has led to an increase in the demand for other components such as power modules and LEDs. LG Innotek is expanding its production in step with the trend.
“The quarter-on-quarter GDP growth rate is expected to go up from 0.9 percent in Q1 this year to 1.1 percent in the third and fourth quarters,” said Hyundai Research Institute Lim Hee-jeong. She continued, “Additionally, the recovery of the U.S. economy will allow Korean corporations’ performance to be improved and investment to be revitalized, which will contribute much to greater employment and consumption.”