Of these 27 groups, 12 cited rival countries entering the Korean market as the main cause. Nine blamed the overcapacity on a short-term fall in demand from the global economic downturn, and four others named production increases by competing firms.

The groups had different projections on when supply and demand will return to a balance.

Eight predicted at least another 10 years of overcapacity, while another eight said there will be balance within three years. Other predictions said within five years (six organizations) and within 10 years (three organizations).

Choo Gwang-ho, head of the industrial research division at FKI, said a right perspective of the current situation is necessary. 

"If we look at the problem only from a local point of view or with a short-term view and carry out restructuring through downsizing, we may end up losing business opportunities once the economy starts to recover or hand over the opportunities to competitors," he said.

Twenty-six of the 30 polled groups said their industries have hit stagnation or are facing a phaseout.

Out of the groups, allowed to give multiple answers on what companies need to do should the economic downturn continue, 19 said firms should slash production and 10 said they need to cut back on investment. Another seven advised workforce reductions.

On the government's role, 15 named corporate deregulation, while 13 picked finding and nurturing future growth engines. Twelve wanted new markets to be secured, and four named a reform of the labor market. (Yonhap)