Large Corporations Also Cautious with Second Half Investments: "Similar to or Reduced Compared to First Half"

Amid global economic uncertainties, domestic large corporations are expected to maintain investment levels similar to the first half of the year without significantly increasing investments in the second half. Although the government is strengthening investment incentive policies, the ongoing global monetary tightening and limited expectations for demand recovery are major factors behind this trend.

On the 15th, the Federation of Korean Industries commissioned a survey through the polling agency Mono Research targeting the top 500 companies by sales to investigate their domestic investment plans for the second half of the year. The results showed that 60.7% of respondents planned to invest at a scale similar to the first half. Those planning to reduce investment compared to the first half accounted for 24.3%, while only 15.0% intended to increase their investments.

Companies that said they would not increase investments in the second half cited economic outlook uncertainties such as economic slowdown (33.7%) as the biggest reason. Continued global monetary tightening (18.7%) and financial market contraction along with difficulties in securing funding (11.7%) also contributed to the reluctance to increase investments.

On the other hand, companies planning to increase investments pointed to expectations of business condition improvements (35.4%), securing future new growth engines (31.3%), and expanded investment incentives such as tax support and deregulation (14.6%) as their main reasons. Even if some companies increase investments in the second half due to securing future competitiveness and strengthened government investment incentives, many are expected to maintain or reduce investment levels compared to the first half due to persistent management uncertainties such as global demand slowdown and monetary tightening.

Companies identified global economic slowdown (28.4%) as the biggest risk hindering investment activities in the second half. This was followed by continued interest rate increases due to global tightening (22.1%) and sustained high exchange rates (14.3%) as major investment risks.

The International Monetary Fund (IMF) has projected this year’s economic growth rate at 2.8%, which is significantly lower compared to 6.3% in 2021 and 3.4% in 2022. Furthermore, the global tightening trend to curb inflation continues, and the risk of high exchange rates due to the interest rate gap between Korea and the United States remains.

Among large corporations, 67.2% identified the full-scale recovery of investments as expected in the first half (36.4%) or second half (30.8%) of next year. “After 2025” accounted for 11.2%, and “the second half of this year” was 10.3%. This reflects the expectation that the global economic recession this year may lead to a base effect next year, along with the possibility of stabilization in key price variables such as interest rates and inflation.

Companies most frequently mentioned strengthening tax support such as research and development (R&D) credits and corporate tax cuts (26.2%) as policy tasks to improve the domestic investment environment. Voices were also raised expecting ▲relaxation of corporate regulations related to investment (19.3%) and ▲adjustment of the pace of base interest rate hikes (16.2%).

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