IT sector to drive economic growth

By Seo Jee-yeon

Little growth seen outside automotive, IT sectors

  • Published : Dec 30, 2013 - 20:03
  • Updated : Dec 30, 2013 - 20:03

Polarization will continue to become a key feature of not only Korean society but also the landscape of industries this year, the Hana Institute of Finance said in its recent industries outlook report for 2014.

“The export-driven Korean economy will be on a gradual recovery track in line with a pick-up of the global economy, but the polarization by industry and by corporate ranking within industries will intensify,” the report pointed out.

By industry, the information technology sector, led by Samsung Group and other tech giants, will continue to power the nation’s economic growth, while non-IT sectors except the car industry are forecast to remain stagnant.

The projection means that economic dependence on the nation’s top two corporate names ― Samsung Electronics and Hyundai Motor ― will further deepen this year.

Data from the Korea Exchange found Samsung Electronics and Hyundai Motor accounted for more than half of net profits generated by the top 100 companies by sales Korea’s as of 2012.

The share of net profits generated by the two heavyweights continued to increase from 19 percent in 2007 to 35 percent in 2009, 36 percent in 2011 and a record-high 51 percent in 2012.

The structural problem in industries will encourage the government to continue to seek a policy to cultivate small and mid-sized companies, Lee added. 

Regarding the 2014 outlook for industries, the state-run Korea Institute for Industrial Economics and Trade said the demand for Korean IT goods overseas and at home will remain high, but the speed of growth will slow down.

“The year-on-year export growth of IT products, including mobile phones, semiconductor products, and home appliance goods, is expected to stand at 5.9 percent this year, which is down from 9.5 percent in 2013,’’ the institute said in a report.

Hyundai Research Institute, in particular, raised concerns over the impact of a slowdown in exports of IT goods on the country’s economic growth. The fall in IT exports results from falling global demand for Korean-made mobile handsets as the market approaches saturation, it explained.

The outlook for the car industry, one of the nation’s top two industries, is rosier than the IT sector.

The KIET projected the local car industry will enter a boom, driven by demand at home and abroad. “Serial launches of new cars will lift domestic consumption this year, which slumped in 2013,’’ it said.

The growth rate of car exports will nearly double this year, reaching 6.7 percent from 3.6 percent in 2013, it added.

Excluding the car industry, exports of non-IT manufacturing sectors, ranging from oil products to steel to chips, will remain in the doldrums this year, struggling with low profitability.

Among the nation’s top 10 industries, the steel industry, which has been squeezed by falling global demand and a glut of supply for the past few years, and the shipbuilding sector, which is in a slump due to the protracted global economic downturn, will continue to see exports fall this year, the KIET said.

By Seo Jee-yeon (