South Korean conglomerates see economy worse than 2008

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Seoul, Aug 22: A majority of South Korean conglomerates were seeing current economic conditions worse than those in 2008 when the global financial crisis occurred, a poll showed Wednesday.

According to the poll conducted on 25 large firms, including Samsung and Hyundai, by the Federation of Korean Industries, 44 percent of the respondents said the current crisis arising mainly from the European debt crisis was more serious than the 2008 global financial crisis, reported Xinhua.

As many as 36 percent replied that the current crisis was similar with the 2008 global financial crisis, while 20 percent worried that the current economic conditions were much worse than those under the 2008 global crisis.

The results came as outlook for the South Korean economic growth was increasingly dimmer. Bank of Korea (BOK) lowered its 2012 economic growth outlook for the country to 3 percent from an earlier estimate of 3.5 percent in July 13, a day after cutting its policy rate by 25 basis points (bps) to 3 percent, the first alteration in more than 3 years. The finance ministry revised down its growth outlook for 2012 from 3.7 percent to 3.3 percent in late June.

Large firms picked fragile domestic demand and slowing exports as major difficulties in doing their businesses, reflecting the current situation in which economic conditions both at home and abroad became sour, said the lobbying group of big businesses.

Amid the aggravating economic situation, 16 percent of conglomerates surveyed planned to reduce investment and recruitment, with 20 percent mulling the reduction of capital spending and employment.

Meanwhile, more than half of large firms worried that the current crisis would continue until the second half of next year, while 12 percent were seeing the crisis last until 2014.

IANS