Over Half of Industries in South Korea Expected to Struggle Amid Global Economic Slump

SEOUL, South Korea – A majority of South Korea's industries are expected to face declining performance in the first quarter of the year, as they struggle to recover from the effects of the COVID-19 pandemic and a global economic slowdown. The downturn comes after many sectors enjoyed a temporary boost during the pandemic.

According to recent earnings projections from at least three research centers, 10 out of 14 major South Korean industries are expected to see a decline in profitability in the first quarter. In particular, the shipping, refining, steel, and chemical industries are anticipated to see their operating profits cut in half compared to a year ago.

Shipping industry operating profits are projected to drop by 74.4% from the first quarter of the previous year. Excluding the electronics industry, which is expected to turn unprofitable, the shipping sector will likely suffer the most significant blow. Last year, the shipping industry benefited from the pandemic-driven shortage of ships, which led to an unprecedented surge in freight rates.

The steel industry also enjoyed improved profitability due to rising raw material prices caused by supply chain disruptions during the Russia-Ukraine war. The refining and chemical industries experienced increased operating profits thanks to surging global oil prices and increased demand for sanitation products during the pandemic, respectively.

However, the situation has reversed this year. The Shanghai Containerized Freight Index (SCFI), a global shipping freight index, has plummeted by more than 80% over the past year. As the COVID-19 situation has improved and ship shortages have been resolved, industries that had previously benefited from the pandemic are now struggling.

The beauty, food, telecommunications, and portal industries have also been unable to escape the impact of the global economic downturn. The beauty industry's operating profit is expected to decrease by 19.1%, followed by the food industry with a 5.8% decline, the portal industry with a 1.6% drop, and the telecommunications industry with a 1.3% reduction.

The aviation industry's operating profit is expected to decrease by 15.23% compared to the first quarter of last year due to reduced cargo demand. However, as passenger demand gradually recovers, the outlook for the industry is not entirely negative. South Korea's Ministry of Land, Infrastructure, and Transport has announced plans to restore 90% of pre-pandemic international flight operations by September.

An industry insider said, "Most companies are not facing favorable business conditions this year due to the global economic downturn," adding that "the decline in profitability for industries that enjoyed a surprising boom during the COVID-19 pandemic is particularly severe."