Facility investment forecast to shrink 1.4%

Facility investment by businesses in South Korea will likely contract for three consecutive years from 2013 as companies remain reluctant to spend in the face of toughened and cloudy market conditions, a survey showed Sunday.

Corporate investment in facilities is expected to decline 1.4 percent on-year to a combined 127.9 trillion won ($116.5 billion) this year, according to the survey by the Korea Finance Corp. The survey was conducted on 3,251 businesses across the country.

Last year, companies are estimated to have invested 129.7 trillion won in facilities, down 1.6 percent from 2011. If this year’s forecast is right, it would mark the third straight year of a facility investment contraction.

For this year, facility investment by small and medium-sized companies is forecast to plunge 16.3 percent from a year earlier.

Large companies are also expected to reduce their investment by 1 percent, the survey showed.

Manufacturers will likely reduce their investment more significantly than others.

Facility investment in the manufacturing sector is expected to shrink 5.2 percent on-year in 2013, while the non-manufacturing sector is forecast to see a 3.6 percent increase. (Yonhap News)