Economic Slowdown Not So Slow
Economic Slowdown Not So Slow
  • Matthew Weigand
  • 승인 2009.02.19 16:29
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Bubble Fighter, Nexon
There is a lot of talk about the crash of the Korean economy and the economic disaster that the whole world is facing. However, there are many signs that things are not as bad as they could be, which can give us hope for the future.

 Most major companies, including Samsung and LG, Korea's two mainstays of the IT industry, are posting losses for the last quarter of 2008. However, Hyundai/Kia posted an actual increase in sales of over 6%, even though overall profits were down. Overall in 2008, Hyundai posted record-high sales of 32.2 trillion won (US$23.3 billion). Although the company did see some signs of the economic recession, they still retained a profit. It is rumored that Hyundai's job-loss return policy has been a major factor in assuring customers enough to purchase from them. Customers can return a car at no charge within one year of purchase if they experience physical disability, job loss, personal bankruptcy, death, or a job transfer overseas.

Secondly, there was a rise in very expensive gift certificates, with values of up to 30 million won (US$22,350) pur-chased in the middle of January. The pur-chases were reported by the Korea Times as all being made by company credit cards, and approximately 1.4 billion won (US$1 million) was sold in the span of just a few weeks. So, despite the econom-ic downturn, there are definitely many companies who have money to give away to, presumably, their employees.

But the best sign that the econo-my is not doing so bad now and will recover soon is that Korea's foreign currency reserves are still holding up, and have actually increased. The South Korean government keeps such high foreign cur-rency reserves to prevent another financial crisis similar to the one in 1997-1998. At the end of 2008 South Korea's reserves were US$201 billion, the sixth largest in the world. The government will be able to use this money to defend the won against further fall and blunt the worst impact of the financial crisis.

Korea and other export-oriented coun-tries like China and Japan have been receiving most of the world's money for years now, as they are producers and exporters of goods that the whole world uses. This means that, similar to the gov-ernmental foreign currency reserves that are there in case of emergency, Samsung, LG, and other large companies also have reserves of cash that they can use to tide them over until an economic recovery. This sounds like a small hope, but since Samsung alone accounts for 20% of Korea's total exports, it is definitely good to see a company that can take a few hits without going down.

Finally, the economic crisis is actually a good thing for some companies. Online gaming company Nexon showed a rev-enue increase of 26 percent and net income growth of 6 percent in 2008. The company is getting numerous accolades from both western and eastern game play-ers and journals, for both their subscrip-tion ideas and their content. The trend seems to be that as the number of unem-ployed people goes up, so do the sub-scribers and profits of online games.

So while it is true that there are some serious problems with the economy which might not be fixed for the rest of 2009, and it is true that there are jobs lost and businesses closed, there are still a few bright rays of hope shining through the clouds.


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