SEOUL | Wed Dec 19, 2012 8:59pm EST
SEOUL Dec 20 (Reuters) - South Korean manufacturers' capital investment is expected to rise marginally in 2013 after a small contraction this year, a private sector survey showed on Thursday, underscoring fragile corporate sentiment as the global economy continues to slump.
Local manufacturers' investment on new equipment will likely rise by 1.3 percent in 2013 after shrinking by 1 percent this year, the Korea Chamber of Commerce and Industry (KCCI) said in a statement following a survey of 500 firms.
In October, the Bank of Korea projected a 5.0 percent rise in capital investments next year as part of its overall forecast for 3.2 percent economic growth in 2013. But the KCCI survey suggests significant downside risks as the euro zone's struggles and the potential for a U.S. fiscal crisis continues to sap global momentum.
South Korea's economy barely grew in the third quarter, when gross domestic product expanded just 0.1 percent in seasonally adjusted terms from the April-June period. A sharp reduction in corporate investments has been cited as a major drag on the economy by policymakers and analysts.
The industry body said 28.6 percent of respondents planned to increase their investments, while another 27.6 percent of firms were looking to cut capital spending due to the uncertain business outlook.
A survey released by the central bank last month showed that the index measuring Korean manufacturers' sentiment on their outlook fell to the lowest level in more than 3 years, suggesting that a sharp pick-up in economic activity is unlikely.
The KCCI survey also showed that capital investment from export-oriented firms will fall by another 5.8 percent next year after a 2.2 percent decline, reflecting weak external demand. Domestic demand-oriented firms' investments were seen rising by 4.8 percent in 2013 after a 0.4 percent fall this year.
In terms of sectors, auto-related firms were seen increasing their capital investment by 7.0 percent in 2013 after remaining flat this year. Semiconductor and display-related firms' spending was seen up 2.6 percent next year following a 5.8 percent decline in 2012.
On the other hand, oil, chemicals and energy-related firms' spending was seen down 12.4 percent next year after a 5.5 percent decline this year. Steel and metals-related manufacturers' spending was seen down 8.8 percent in 2013 following a 1.1 percent decline in 2012.
(Reporting By Se Young Lee; Editing by Jacqueline Wong)
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