The pace of recovery for small and medium enterprises (SMEs) is expected to slow in the new year, with hiring of workers likely to take a hit amid challenging conditions, a local think tank said Sunday.
According to the Korea Small Business Institute (KOSBI), industrial output gains will wane, with job creation by smaller firms to experience some tough times.
"The government's concerted push to create jobs can lead to positive developments, although population growth slowdown, weak consumption and restructuring in the self-employed sector can exert an overall downward pull," the institute said.
It said that while exports could grow in the 4 percent range on-year thanks in part to heightened competitiveness in key sectors, all-important domestic consumption and facility investment may remain weak, which could hold back growth.
"Even in trade, the rise of protectionism and slowing down of China's economy could be a negative influence on outbound shipments," KOSBI said.
It then said that there is a risk of greater economic polarization as a rise in borrowing costs and tighter oversight on household debt could hurt marginal companies. On the plus side, venture startups with growth potential and the necessary technology could experience solid growth in the coming months.
The public organization said Asia's fourth-largest economy needs to engage in innovative growth policies, ease up on unnecessary red tape, help SMEs make inroads abroad and facilitate the return of companies that have invested abroad. It should, moreover, strengthen the foundation for fair competition between small and big companies, with the government taking the lead to implement policies that can help innovative SMEs and reduce debt-related risks for smaller-sized companies. (yonhap)