Cruel spring ahead for industry

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Cruel spring ahead for industry

Most key Korean industries are likely to see their profitability worsen in the second quarter due mainly to a firmer currency and higher oil prices, a business lobby said yesterday.
The Federation of Korean Industries said the profitability of six sectors ― oil-refining, petrochemicals, cement, tool machinery, textiles and distribution ― would deteriorate in April-June from a year earlier.
Only the shipbuilding and machinery are likely to see their profitability improve in the coming quarter, said the federation, the interest group of Korea’s big conglomerates.
It blamed the won’s strength against the U.S. dollar and Japanese yen, high crude prices and steep competition from China for the outlook.
The federation also said business conditions will improve for the tire, shipbuilding, steel, construction and machinery industries in the second quarter from a year earlier, but those for the cement, textile and distribution sectors will worsen.
Cars, electronics and six other industries will experience business conditions similar to the same period a year earlier, the lobby said.
In a separate report, the Korea Chamber of Commerce and Industry predicted the nation’s steel, machinery, shipbuilding and semiconductor sectors would see improvements in the second quarter. In contrast, oil-refining, petrochemicals and textiles are expected to suffer from sluggish business conditions owing to falling export prices and tougher competition from cheap Chinese products.
Korea’s economic growth is expected to slow to the mid-4-percent range this year from a 5-percent advance in 2006 because of cooling exports and weak domestic demand.
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