Facilities investments down again

Facility investment by businesses in Korea will likely contract for the third consecutive year in 2013 as companies remain reluctant to spend in the face of cloudy market conditions, a survey showed yesterday.

Corporate investment in facilities is expected to decline 1.4 percent on-year to a combined 127.9 trillion won ($116.5 billion) this year, according to the survey by the Korea Finance Corporation. The survey was conducted on 3,251 businesses across the country.

Last year, companies are estimated to have invested 129.7 trillion won in facilities, down 1.6 percent from 2011. If this year’s forecast is right, it would mark the third straight year of a facility investment contraction.

For this year, facility investment by small and medium-sized companies is forecast to plunge 16.3 percent from a year earlier. Large companies are also expected to reduce their investment by 1 percent, the survey showed.

Manufacturers will likely reduce their investment more significantly than others.

Facility investment in the manufacturing sector is expected to shrink 5.2 percent on-year in 2013, while the nonmanufacturing sector is forecast to see a 3.6 percent increase.

Korea’s economy, Asia’s fourth-largest, grew 2 percent last year, the slowest growth in three years, the central bank said. It earlier cut its growth outlook for 2013 to 2.8 percent from 3.2 percent amid worries that its exports could get hurt by cloudy external market conditions. Yonhap