COVID-19 Causes 1.8 Trillion KRW Drop in Corporate Facility Investment, "1.3 Trillion KRW Increase Expected Next Year"

[Asia Economy Reporter Kangwook Cho] The amount of facility investment executed by domestic companies this year has decreased by 1.8 trillion KRW compared to the previous year. This is attributed to the global economic recession caused by the novel coronavirus disease (COVID-19) and uncertainties regarding economic outlooks.

On the 22nd, the Korea Development Bank announced through the '2020 Second Half Facility Investment Plan Survey' report that the provisional execution amount of facility investment by domestic companies this year was 164.4 trillion KRW, a decrease of 1.8 trillion KRW (-1.1%) compared to the previous year. It was interpreted that the scale of facility investment decreased compared to the previous year due to the global economic recession caused by COVID-19 and uncertainties about the economic outlook.

However, this execution amount increased by 10.6 trillion KRW (6.9%) compared to the facility investment plan amount for this year (153.8 trillion KRW) announced in July.

This is analyzed as a result of overall contraction in facility investment due to the global economic recession caused by COVID-19, but investment demand rebounded mainly in sectors benefiting from the spread of untact culture such as semiconductors and displays.

By industry, the semiconductor industry increased by 9.6% to 39.7 trillion KRW this year compared to 36.3 trillion KRW last year, due to continued favorable business conditions.

In the display sector, although the investment amount decreased by 13.1% compared to last year's investment amount (12.6 trillion KRW), the execution amount of investment (10.9 trillion KRW) surged by 26.7% compared to the initial plan amount (8.6 trillion KRW) due to business recovery following the spread of untact culture.

Industries such as automobiles and petrochemicals saw facility investment decrease by more than 9% compared to the previous year due to economic downturn and concerns over global oversupply.

The scale of facility investment planned by domestic companies for next year is expected to increase by 1.3 trillion KRW (0.8%) to 165.7 trillion KRW compared to this year's provisional execution amount.

Although uncertainties regarding COVID-19 remain next year, it is analyzed that companies intend to expand the scale of facility investment compared to this year due to expectations of global economic rebound and domestic demand recovery.

However, during the survey period, many companies were unable to finalize their management plans for next year due to the resurgence of COVID-19, so the investment outlook may be reflected lower than actual.

The Korea Development Bank expects that in the manufacturing sector, the semiconductor industry will continue its investment growth trend due to favorable business conditions. In the non-manufacturing sector, the electricity and gas industries are expected to increase investment compared to this year due to expanded investments related to renewable energy. However, the petrochemical and petroleum refining industries are expected to reduce investment due to concerns over global oversupply.

This content was produced with the assistance of AI translation services.