Firms Skeptical About Economy in 2008
By Jane Han
Staff Reporter
A majority of local companies feel downbeat about next year's local economic growth clouded by high oil prices and weak domestic demand, a survey said Tuesday.
A Korea Chamber of Commerce and Industry (KCCI) poll of 500 manufacturers showed that respondents predict the local economy is likely to grow about 4.8 percent next year, which falls short of an average estimate of 5 percent made by think thanks recently.
The Korea Development Institute said earlier this month that the country's economic growth is likely to accelerate to 5 percent based on private spending growth.
And the Ministry of Finance and Economy also made similar predictions of a 5-percent jump, as analysts cited recovering sales of Korean goods in China, the European Union and the Middle East, while consumer sentiment was given a boost through improving employment rates.
Hyundai Research Institute, one of the leading private think thanks, was a bit more optimistic as it predicted in September that the economy will expand by an annual pace of 5.1 percent.
However, the most recent estimates say otherwise, citing soaring oil prices and rising costs of raw materials, coupled with the South Korean won's rise against the U.S. dollar.
More than 40 percent of survey respondents also said they expect economic conditions in 2008 and this year to be alike, while 32.6 percent said it will worsen. And only 24.8 percent said the economy will improve.
The shaky domestic consumption and sluggish facility investments were citied as main reasons for the gloomy outlook.
``Although the economy recently showed an upward trend, a majority of manufacturing companies still feel uncertain and negative about next year due to rising oil prices,'' said a KCCI official.
The price of Dubai crude oil, the country's benchmark, hiked 57.5 percent this year to a record high of $90.10 a barrel as of Monday.