Korea's Machine Tool Forecast in 2014
Mar 31, 2014
Exports Expected to Reach US$2.5 Bil in 2014
In 2014, Korea’s machine tool exports are expected to grow 13.1% year-on-year to US$2.5 billion. The double-digit growth projection has the potential to be realized owing to a 3%-level growth of the global economy, continuation of economic recoveries in the Unites States and eurozone and recovery of exports to BRICs, which were more or less sluggish in 2013. Strengthened exploration of overseas markets and utilization of already-concluded FTAs by domestic enterprises and the possibility of concluding a Korea-China FTA also are likely to serve as positive export growth factors.
In addition, favorable conditions for increased demand also include expanded overseas production by domestic carmakers, such as production at the third plant in China, full-fledged local production in Brazil and plant facility expansion in Turkey by Hyundai Motor and Kia Motors.
Amid this environment, the domestic machine tool industry is expected to stage active overseas marketing activities in 2014 with a focus on leading overseas machine tool exhibitions in India, China, Germany, Italy, Turkey, Japan, etc.
On the other hand, a slower recovery of the global economy, possibility of the U.S. tapering of quantitative easing, unrest in financial markets in emerging countries and uncertain economic vitality in developing countries as well as a continuation of China’s investment adjustment have the potential to be stumbling blocks.
In the midst of a mid-7% level of low growth projected due to China’s restructuring going into full swing, the possibility of a financial crisis in some South and Southeast Asian countries, including India and Indonesia, may be the largest variable.
In 2014, Korea’s machine tool exports may near the record-high results of 2012 (US$2.55 billion) but it will be hard to set a new record. Meanwhile, fierce competition is expected in the global machine tool market in 2014 due to continuation of Korean won currency appreciation and Japanese yen depreciation, expanded overseas production of low-priced machine tools and strategic alliances between the world’s machine tool manufacturers.
Korea’s machine tool imports in 2014 are expected to grow 12.3% year-on-year to US$1.6 billion, realizing the first conversion to growth in three years.
Imports Sees Double Digit Growth in 2014
Korea’s machine tool imports in 2014 are expected to grow 12.3% year-on-year to US$1.6 billion, realizing the first conversion to growth in three years.
The double-digit growth is attributable to growth in domestic facility investment, continuation of weakened yen currency, expanded development of low-priced machine tools by manufacturers in advanced countries, and expansion of FTA import items. In contrast, continuation of low growth in the domestic economy, expanded competition with domestic machine tool manufacturers, etc. are likely to serve as factors that limit imports.
Korea’s Machine Tool Production Seen to Grow 9.8% in 2014
Korea’s machine tool production in 2014 is projected to grow 9.8% year-on-year to 6.38 trillion won. The growth projection is based on the expected recovery of domestic facility investment, the nation’s export expansion to key overseas machine tool markets, including the United States and Europe, base effects from poor business performance results in 2013, and other factors.
According to the Korea Institute for Industrial Economics and Trade (KIET), domestic facility investment in 2014 will grow 5.5% year-on-year, a comparatively active recovery trend centering on IT manufacturing businesses thanks to export recovery and the alleviation of uncertainties.
Demand recovery in major overseas machine tool markets and employment of active domestic and overseas marketing by domestic enterprises also are likely to contribute to the growth of domestic machine tool production. Due to a low-growth trend of the domestic economy, continuation of weaker Japanese yen currency and growth slowdowns in huge markets like China and India, however, production in 2014 may, more or less, not be able to reach the record high results of 2012.
The 2014 demand related to automobiles, the largest demand business type, may improve compared with 2013 owing to the market debut of new domestic cars, but is not expected to reach demand levels similar to those experienced in early 2012.
However, the outlook for the global automobile market released on December 13, 2013, by the Korea Automobile Manufacturers Association (KAMA) indicated that internal and external demand for domestic machine tools in 2014 is expected to improve thanks to a 4.8% growth (90,3400,000 units) in global automobile sales, with entry of the European market into a recovery phase and recovery of emerging markets. Meanwhile, if domestic machine tool production is converted into U.S. dollar equivalency, production will exceed US$6 billion for the first time in history, according to the foreign exchange rate projection (1,058 won/U.S. dollar) for 2014 by KIET.
Source: SIMTOS KOMMA
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