FKI survey says 2013 as bad as 2008

Korean businesses consider the current economic conditions similar to the 2008 global financial crisis or worse, a survey of Korea’s top 600 companies said yesterday.

According to the survey by the Federation of Korean Industries, 45.1 percent of respondents said the current economic slowdown resembles the situation in late 2008 and 2009, while 31.8 percent said they think the situation is worse than five years ago.

When asked when they expect the economy to pick up, 51.3 percent of the companies said it’s “unpredictable,” followed by 21.4 percent that said the economy may recover in next year and 19.3 percent said things will get better in 2015. Only 7 percent said they believe the economy will improve in the second half of this year.

Companies pointed to poor domestic sales, waning profitability and the rise in production as reasons for their gloom.

They said the downturn will be the biggest economic variable to impact management in the second half of the year. They named proposed laws to promote so-called economic democratization and tax probes as noneconomic variables.

Over 60 percent of businesses said they will focus on beefing up risk management in the second half of the year, while 30 percent of companies said they will make more investments.

Domestic demand-oriented companies said they will make reorganizing business a top priority, while export-oriented businesses said they will enhance risk management on such factors as foreign exchange rates.

“Despite the fact that the current economic situation is on a par with the 2008 financial crisis, companies are trying the best they can do to meet investment goals,” said Kim Yong-ok, an official at the FKI.

“The National Assembly is pushing through economic democratization bills and tax probes against companies are taking place,” he said, “And I’m concerned that all these factors will force companies to shrink investment further.”

A separate survey done by the Korea Chamber of Commerce and Industry said the major hurdles for increased investment by companies are the uncertain economic outlook, coming up with funding, a lack of new investment opportunities and various government regulations.

BY KIM MI-JU [mijukim@joongang.co.kr]