South Korea's major industries are expected to face a mixed outlook next year as the weak domestic consumption and uncertainties surrounding the new administration in the United States cast a cloud over their business plans, industry experts said Tuesday.
During a seminar held by the Korean Federation of Industries (FKI), the nation's largest business lobbying group, industry experts suggested a positive prospect for tech, construction and steel industries, while expecting downturn in auto, shipbuilding and petrochemical sectors.
Major exporters face difficulties in predicting how the global market will move next year as the incoming government of U.S. president-elect Donald Trump has vowed to raise trade barriers, which boosted concerns over protectionism in the global economy amid slowdown in the Asia's fourth-largest economy.
"Many companies find it hard to set business plans due to rising uncertainties at home and abroad, including the possibility of renegotiation of the free trade deal with the United States under the new administration and sluggish domestic consumption," Im Sang-hyuk, a senior FKI official, said. "Both industry and consumer sentiment remains negative.
Analysts said the tech industry will see rising demands in dual camera and flexible organic light-emitting diode (OLED) display to offset slowing sales from the highly competitive smartphone market. Leading electric vehicle makers, such as Tesla, will open up more opportunities for batteries and electric vehicle parts makers.
Steel industry were expected to reap higher profit margins from steel products and non-metal products, with sales prices of iron ore expected to rise 15-20 percent in the first half of 2017, they noted.
Construction companies expect new orders from Iran and expansionary measures by Asia Infrastructure Investment Bank. Analysts say builders will materialize profits from the local housing market boom over the past three years, though the growth will slowdown due to tougher government regulations introduced earlier this month.
In contrast, automakers were expected to face weak demands next year, especially in the domestic market and the U.S., its major export destination.
Shipbuilders, which have pledged to carry out massive restructuring, will continue to deal with thin orders amid the protracted industry slump next year.
The petrochemical industry will turn downward after reaching a peak in the first half of the year after the regular maintenance is completed, experts noted.