The recent third quarter earnings figures posted by large Korean companies reflect the current state of the national economy.(Image: Kobiz Media)
SEOUL, Oct. 29 (Korea Bizwire) — A number of industries that propelled South Korea to its economic “miracle” are now headed downhill.
The China-U.S. trade war, rising interest rates in the U.S., lowered labor productivity and other hurdles have large Korean corporations stuck in a “tunnel of uncertainty” in which companies are unable to accurately forecast the future.
Although economists who maintain a positive outlook say that the Fourth Industrial Revolution will help spur new growth for Korean firms, realists state it will be hard for various corporate indicators not to reflect a downturn for the time being.
The recent third quarter earnings figures posted by large Korean companies reflect the current state of the national economy.
While Samsung Electronics Co. and SK hynix Inc. announced record earnings, most economists agree that growth will falter in the final quarter of the year.
More problematic is the element of uncertainty. Because the semiconductor industry is heavily reliant on exports, the tension between the U.S. and China regarding trade could have a negative effect on the South Korean economy.
A surge in investment by China in its own companies is also a threat. The price of DRAM chips and flash memory chips have already started to fall.
The earnings posted by Korean carmakers are even more alarming. Hyundai Motor Co.’s operating profits were just one-quarter of what was reported in the same period last year. Kia Motors Corp.’s profit margin was just 0.8 percent.
Shipbuilding companies such as Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. have been hit especially hard by the economic downturn, as both companies posted negative growth in the second quarter.
Analysts believe that the two companies will be unable to extricate themselves from the red in the third quarter as well.
H. S. Seo (hsseo@koreabizwire.com)
