S Korean corporate capital spending to fall 2.5% in 2009

SEOUL. February 17. KAZINFORM South Korean firms scheduled to cut their capital expenditure in 2009 by 2.5 percent as the economy falls deeper into a downturn, a survey by the Federation of Korean Industries said Tuesday.

South Korea's top 600 firms by revenue plan to shrink their capital investment to 86.7 trillion won (60.2 billion U.S. dollars), posting the first annual contraction in eight years, according to the survey. Capital investment in manufacturing sector is expected to decline 10.9 percent to 46.4 trillion won (32.2 billion U.S. dollars) from a year before, while non-manufacturing sector sees a 9.5 percent growth to 40.3 trillion won (28 billion U.S. dollars) thanks to favorable investment conditions in electricity, gas, and water supply. Among the manufacturing industries, the nation's largest companies, such as semiconductor, flat-panel display and shipbuilding firms, said they would cut their capital expenditures by 42.5 percent, 40.9 percent and 26.5 percent, respectively, according to the federation. The survey showed that the most important factor to influence firms' capital expenditure schedule is the global economic condition, which 36.8 percent of the subject companies chose. The survey also said that 33 percent of the firms chose stabilization of the financial market and 32.5 percent pointed to radical pump-priming policies as the most urgent issue. "We also conducted a research on individual companies' detailed capital investment schedules, under the condition not to open the result to the public. As the investment market seems to get more volatile this year, there may be changes to the details in their schedules," said the federation; Kazinform cites Xinhua. "However, there will not be major changes made to the general trend in the top 600 firms' capital expenditure," the federation added.