BNK Economic Research Institute Releases '2023 Southeast Region Economic Outlook' Report ... Economic Growth Rate Forecasted at 1.6%

BNK Financial Group CI.

[Asia Economy Yeongnam Reporting Headquarters Reporter Hwang Duyul] BNK Economic Research Institute, affiliated with BNK Financial Group, announced the ‘2023 Southeast Region Economic Outlook’ research report on the 8th.

According to the report, the Southeast region's economy in 2023 is expected to record a growth rate of 1.6%, lower than the national average.

Following this year, it is expected to remain in a weak growth of the 1% range for two consecutive years, delaying the recovery of regional economic vitality. The report identified contraction in consumer sentiment, decreased investment, export slowdown, and decline in the real estate market as major factors for the growth slowdown.

In manufacturing, while automobiles are expected to show moderate growth, most key industries such as petrochemicals, machinery, and steel are anticipated to perform poorly, weakening the growth trend. However, shipbuilding is expected to expand its production growth.

The service industry is also expected to face difficulties in improvement due to concerns over negative asset effects, weakened consumer sentiment, and slowdown in private consumption caused by increased interest burdens. Nevertheless, increased domestic and international mobility and travel demand are expected to have a positive impact.

In construction, slight growth is forecasted supported by government housing supply plans, order volume commencement, and stabilization of material supply. However, sluggish construction investment due to rising interest rates, corporate financing difficulties, and reductions in SOC budgets are expected to limit the speed of recovery, resulting in weak growth.

Looking at key industries, the automobile sector is expected to have a modest growth rate despite expectations of domestic demand improvement, due to a decrease in exports.

Domestic demand improvement factors include accumulated backlog, easing of parts supply shortages, and base effects, while exports are expected to decline due to demand contraction in major countries such as the U.S. and Europe, uncertainties surrounding the U.S. IRA, and strengthened protectionist policies.

Shipbuilding is forecasted to have high growth, with production expected to ramp up as large container ships and LNG carriers ordered in 2021 begin full-scale construction.

In particular, with an order backlog of 30 million CGT (Compensated Gross Tonnage), the favorable market conditions are expected to continue for the time being.

However, orders are expected to decrease compared to this year due to selective ordering tendencies, a downturn in shipping market conditions, and concerns over excessive container ship orders.

Petrochemicals are expected to worsen. With China's self-sufficiency rate increasing, demand is decreasing due to economic slowdown, global consumer sentiment contraction, and sluggish downstream industries, while concerns over oversupply are expected to expand due to ethylene production facility expansions.

Additionally, profitability is expected to deteriorate due to a sharp drop in ethylene spreads and increased cost burdens from eco-friendly policies.

Machinery is forecasted to experience negative growth. Domestic demand is expected to decline compared to this year due to reduced facility investment and contraction in construction investment, while exports are also expected to worsen compared to this year due to manufacturing sluggishness, weakened demand for imported construction machinery, and dampened investment sentiment.

Steel is also expected to struggle to grow. Domestic demand is hindered by decreased construction investment, weakened demand for home appliances, and only slight increases in automobile production, while exports are expected to show only slight growth due to sluggish industrial activity in major countries.

The report pointed out that the expanding need for eco-friendly infrastructure investment will continue to act as a burden.

Jung Youngdoo, head of BNK Economic Research Institute, said, “The Southeast region’s economy is expected to face many difficulties next year as well,” adding, “However, since the trends of high interest rates, high inflation, and high exchange rates may ease, it is necessary to be cautious about excessive concerns regarding economic recession.”

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