Most Businesses to Tighten Belts Next Year

A majority of businesses in Korea expect the current economic slump to be prolonged and intend to brace for a hard landing.

The economy has been hit by the protracted U.S.-China trade war, soured Seoul-Tokyo relations and the drastic minimum-wage hike at home.

The Korea Enterprises Federation said Sunday that a survey of 206 member companies late last month showed that 64.6 percent describe economic conditions as a "long-term slump." Only 19.2 percent forecast a recovery and 13.1 percent expect the economy to worsen.

A nugatory 2.4 percent said the economy has bottomed out and is recovering.

Some 47.4 percent said they plan to tighten their belts next year, while 34.1 percent intended to cap spending at this year's level and only 18.5 percent plan to boost it.

Twenty-nine percent of those who said they will tighten their belts said they will cut overheads, 25 percent lay off staff, 15.3 percent cut back on new investments and 13.7 percent slim down operations.

Asked directly about new investment, 39.4 percent said they will reduce it, 38.6 percent that they will maintain it at this year's level and only 22 percent boost it.

Some 33.4 percent of respondents blamed labor policies such as the minimum-wage hike and shortened working week, while 29.1 percent cited slow private consumption, 16.8 percent external uncertainties and 10.3 percent increased red tape.

A KEF spokesman said, "It appears that businesses are taking steps to hunker down and weather the storm."