S. Korea's Facility Investment Forecast To Shrink In 2019: Korea Development Bank (KDB)

South Korea's facility investment is expected to shrink from a year earlier this year, a state-run bank here said in its latest projection released Wednesday, contradicting an earlier outlook from the country's central bank that forecast a slight increase

SEOUL, (UrduPoint / Pakistan Point News - 19th Jun, 2019 ):South Korea's facility investment is expected to shrink from a year earlier this year, a state-run bank here said in its latest projection released Wednesday, contradicting an earlier outlook from the country's central bank that forecast a slight increase.

The state-run Korea Development Bank (KDB) said facility investment is expected to come to 164.4 trillion won (US$139.5 billion) in 2019, down 2 percent from 167.7 trillion won in 2018.

In its latest economic projection released in April, the Bank of Korea (BOK) forecast capital spending to rise 0.4 percent on-year, predicting a 6.4 percent expansion in the second half that would more than offset a 5.3 percent contradiction expected in the first half.

The central bank earlier said the country's facility investment plunged 17.4 percent on-year in the first quarter, apparently contributing to an unexpected 0.4 percent contraction of Asia's fourth-largest economy from three months earlier.

The KDB report comes amid growing concerns over various woes facing the local economy, including a steady decline in exports that are widely expected to intensify amid the escalating trade tension between the world's two largest economies -- the United States and China -- that are also the world's two largest importers of South Korean goods.

The country's outbound shipments have dipped for six consecutive months, while its shipments to China have dwindled for seven consecutive months.

The KDB report said facility investment in the semiconductor industry is expected to fall 0.9 percent this year from a year earlier, while investment in the display industry was expected to dwindle 1.5 percent on-year.

Investment in the two key industries accounts for more than 30 percent of overall facility investment, it noted.

The auto industry will likely see the sharpest drop with the facility investment in the sector expected to tumble 11.5 percent, partly due to increased overseas production, the report said.

The BOK slashed its 2019 growth outlook to 2.5 percent in April from 2.6 percent projected three months earlier. The bank is scheduled to offer a revised growth outlook in mid-July.