Capital expenditure by South Korean companies is expected to fall 7.3 percent this year, the first annual decline since 2002 after the IT bubble burst, state-run Korea Development Bank (KDB) said on Sunday.
Depressed demand following the global recession and uncertainties over the economy's future were cited as key reasons for sluggish corporate spending, a KDB survey showed.
South Korean corporate capital expenditures grew 4.4 percent and 4.5 percent in 2007 and 2008, respectively. Investment by manufacturing companies is seen at 42.9 trillion won ($32.3 billion), down 17.4 percent from 2008, as downturn-hit technology and auto industries curtail spending.
Technology companies are planning to invest only half the amount of last year's as memory chip and flat-screen industries suffer a severe market downturn.
But steel and refining sectors are set to increase capital expenditures by about 50 percent each on new production facility, the bank said.
Capital expenditure by non-manufacturing companies is set to rise 7.1 percent this year to 39.2 trillion won helped by spending in power generation and green energy, the KDB said.