Plunging corporate profits

Korea’s top 10 conglomerates suffered a sharp decline in profitability in the first half of this year. According to a report released by Infobigs, a data provider specializing in big business groups, the combined operating profit of 90 listed affiliates of the top 10 chaebol amounted to 21.3 trillion won ($17.6 billion) in the January-June period, down 54 percent from 45.8 billion won a year earlier.

In the second quarter alone, their combined operating profit stood at 8.11 trillion won, down 63 percent from a year earlier.

The overall slump of the conglomerates was attributed largely to poor showings by chipmakers. Samsung Electronics, the semiconductor and smartphone giant, saw its operating profit plummet 61 percent in the six-month period; SK hynix, the No. 2 chipmaker, suffered an enormous 84 percent drop in operating profit.

Only Hyundai Automotive Group and Hyundai Heavy Industries Group performed well while the remaining eight conglomerates including Samsung Group posted decreases in operating profits.

The poor performances of Korea’s major enterprises came amid the competitive downward revision of Korea’s economic growth. Several global think tanks, including ING Group, have lowered Korea’s growth forecast for this year below 2 percent.

In fact, Korea is surrounded by downside risks on all fronts. Aside from signs of the global slowdown and Japan’s economic retaliation, coupled with the U.S.-China trade war, dark clouds are casting shadows over the prospects of the Korean economy.

What’s more worrisome is that the Moon Jae-in administration seems to be all thumbs when it comes to addressing Korea’s entrenched problems, solely adhering to its futile income-led growth policy.

This is certainly no time for President Moon and his aides to blame external factors for Korea’s current economic plight.