Unfavorable economic conditions at home and abroad, as well as stiffer competition, are expected to weigh down key South Korean industries such as electronics and autos in 2015, market watchers said Wednesday.
In a gathering hosted by the Federation of Korean Industries (FKI), analysts from local securities firms, such as Kiwoom, Daishin and HI Investment and Securities, and think tanks, predicted the electronics, autos, steel and shipbuilding sectors may experience difficulties in the new year.
They added that the petrochemicals and construction sectors will likely be better off, although these two will still have to cope with challenges as well.
In electronics, slower sales growth for smartphones, which fueled expansion in recent years, from 36 percent on-year growth predicted for this year to just 17 percent in 2015, could hurt local businesses.
"The fact that there are no 'game changing' products to generate growth in the place of the current line of smartphones is adversely affecting the market," said Kiwoom Securities researcher Kim Ji-san.
Kim added that stiff competition from Chinese companies in LED, UHD TVs and tablet PCs posed further challenges.
In autos, sluggish market conditions in the United States and European Union are expected hurt demand, with the weak Japanese yen and strong marketing drive by Japanese carmakers to undermine competitiveness of companies such as Hyundai Motor Co. and Kia Motors Corp.
In regards to steelmakers and shipbuilders, market analysts predicted harder times ahead for local companies.
"Demand for steel products is expected to decrease globally in 2015, and with slower than hoped for growth at home, steelmakers may face tough times," said Byun Jong-man of Woori Investment & Securities analyst.
Global demand for steel products is expected to rise just 2 percent next year, according to the latest assessment released by the World Steel Association.
For shipbuilding, a drop in orders for new ships and unfavorable exchange rates that give Japanese yards a chance to boost their price competitiveness could take a toll on the industry as a whole.
As for petrochemicals manufacturers, experts said a drop in crude oil and naphtha prices will be generally good for the industry, but over-capacity in China could affect market conditions.
The average price of the benchmark Dubai crude may hover around US$96 per barrel in 2015 from $101 forecast for this year. Naphtha prices could dip to $867 from $907.
In construction, greater demand for homes in the domestic market and the possibility of more orders in the Middle East may be good for business, although a drop in large infrastructure orders from the public sector may pose problems.
For the overall picture, market watchers stressed that signs of slowdown in China and the Eurozone and concerns surrounding the U.S. hiking interest rates could hurt South Korean companies next year.
Lee Il-houng, president of Korea Institute for International Economic Policy, said the global economy may grow 3.5 percent next year, up from 3.1 percent in 2014. He, however, stressed that South Korea must be ready to cope with rate hikes by the U.S. Fed, and slower growth in Europe, China and Japan.
In particular, China's growth, which may reach 7.2 percent this year, down from 7.4 percent as predicted earlier, needs to be monitored carefully, he said.
South Korea's deputy finance minister Jeong Eun-bo said at the FKI meeting that South Korea is confronting tough challenges in the form of weak domestic consumption and investment along with uncertain export conditions.
He said Seoul is currently pushing forward measured aimed at fueling consumption and improve asset market conditions that can bolster the country's economic growth momentum. (Yonhap)
