S. Korea's top 5 conglomerates pledge capex nearly matching half of GDP through 2026

South Korean conglomerates this week vied with unprecedentedly aggressive capital investment plans, pledging nearly 950 trillion won ($751 billion), or nearly half of the country’s gross domestic product, over the next four to five years, coinciding with the presidency of Yoon Suk-yeol who had promised various deregulations and tax and financial incentives to corporate investments.

The top five lived up to their rank, with No. 1 Samsung Group coming first to vow 450 trillion won and No. 2 SK Group 247 trillion won over the next five years. No. 3 Hyundai Motor Group is spending 63 trillion until 2025 and No. 4 LG Group 106 trillion won for five years. No. 5 Lotte pledged 37 trillion won and No. 7 Hanwha 37.6 trillion won till 2026.

The capital figure so far has hit 946.6 trillion won, overwhelming Korea’s original budgetary scheme of 607.7 trillion won for this year and almost half of last year’s nominal GDP of 2,057.5 trillion won.

Their investment commitments match the new government’s strategic industries for promotion – chip, battery, bio, ITC, and future mobility – and arrive amid international competition to enhance self-sufficiency on technology amid weakened globalization and instability in global supply chain.

Corporate investment can bolster domestic demand and hiring that can aid the economy amid signs of slowdown in the face of rising interest rates and inflation.

The five big groups alone would hire more than 260,000 over the next five years, or an average 16,000 per year, through their increased investment. Given their influence over parts and backup businesses, their massive hiring could generate big ripples across the manufacturing and service job front.

As Korea is home to the world’s two largest memory makers, chips and related industries were pledged with the largest 142.2 trillion won. Renewables including battery and hydrogen would be groomed with 67 trillion won and bio 13 trillion won.

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