S. Korean firms to cut 2009 spending by 2.5 pct on recession fears

SEOUL, Feb. 17 (Yonhap) -- In more bad news for South Korea's economy, corporate
capital spending will fall 2.5 percent this year from the same period a year ago
as the economy heads for its first recession in 11 years, a survey showed
Tuesday.
Citing the poll of the nation's top 600 firms by revenue, the Federation of
Korean Industries said capital investment will decline to 86.7 trillion won
(US$60.2 billion), marking the first annual contraction in eight years.
In particular, companies specializing in semiconductors, flat-panel displays and
shipbuilding -- some of Korea's largest industries -- said they would cut their
capital expenditures by 42.5 percent, 40.9 percent and 26.5 percent,
respectively, the federation said.
Last week, new Finance Minister Yoon Jeung-hyun predicted the economy would
shrink two percent this year, as exports have fallen at a rapid pace and domestic
demand remains sluggish.
In the final quarter of 2008, the economy contracted 3.4 percent from the same
period a year ago, the Bank of Korea said last month. Last year, the economy
expanded just 2.5 percent, compared with 5.1 percent growth in 2007.
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