It is projected that the domestic machinery industry will show a sideways trend in 2024 due to the coexistence of negative factors such as geopolitical risks and high interest rates and opportunity factors such as large-scale infrastructure investment.

The Korea Institute of Machinery and Materials (President Ryu Seok-hyun) under the Ministry of Science and ICT recently published the 115th Machinery Technology Policy, ‘Machine Industry Achievements in 2023 and Outlook for 2024.’

Accordingly, despite the slump in the upstream industry, the machinery industry in 2023 is expected to record production of KRW 114 trillion, up 0.6%, exports of USD 61.4 billion, up 1.6%, and imports of USD 51.8 billion, down 7.0%.

In 2024, the machinery industry is expected to show a flat trend in both production and exports compared to 2023 due to negative factors such as geopolitical risks, high interest rates, and a slump in upstream industries, as well as large-scale infrastructure investment in the Middle East and expansion of exports to emerging markets for the machine tool industry.

In 2024, the Korean machinery industry is expected to see exports increase across most key industries compared to 2023, despite limited growth in the global economy.

In addition, there are positive aspects such as improvement in the semiconductor market due to improvement in demand for IT products and other forward-looking industries, and expansion of plant orders in the Middle East and Europe, which are expected to boost the machinery industry in 2024. It seems like it will have an impact.

Since 2022, there have been ongoing concerns about a decline in domestic machine tool orders and a decline in exports to China due to regulations on China.

By industry, the machine tool sector recorded a 17.1% decrease in cumulative orders for machine tools in 2023 compared to last year, and a 21.5% decrease in exports compared to the previous year due to a slump in the upstream industry and a decline in consumption.

The machine tool industry in 2024 is expected to maintain the 2023 level due to the expansion of exports to emerging markets such as Mexico and the Middle East, although there are negative factors such as the global economic slowdown and geopolitical risks.

The plant sector saw a 23.8% increase in orders compared to the previous year as large-scale petrochemical projects in the Middle East were promoted, and the boom is expected to continue in 2024 due to investments in petrochemical plants and megacity projects in the Middle East.

The construction machinery sector recorded $7.28 billion, up 1.5% from the previous year due to increased exports to the U.S., but production and exports are expected to decrease in 2024 due to the long-term slump in the construction industry and decreased global demand for construction machinery.

On the other hand, infrastructure investment from the Middle East and expansion of large-scale domestic public infrastructure investment are expected to be positive factors.

Semiconductor equipment exports are expected to decline in 2023 due to the sluggish semiconductor market that began in late 2022, with a decline in semiconductor demand from upstream industries and an increase in memory inventory.

The semiconductor equipment market is expected to rebound slightly in 2024, based on supply and demand adjustments in the semiconductor market and the base effect in 2023.

The display equipment sector is expected to see a 30.1% decrease in exports to China in 2023, leading to a 27.6% decrease in overall exports, reflecting a decrease in demand from upstream industries such as IT products.

However, due to the expansion of OLED investment by major global companies, it is expected to increase from 2023 to 2024. It is expected to grow in contrast.

Major institutions predicted that the machinery industry would grow slightly in 2024 compared to 2023 due to a recovery in demand for IT products such as semiconductors.

The research team cited the recovery of the machine tool industry due to the base effect of the forward industry and special infrastructure development in the Middle East as positive factors for the machinery industry.

Gil Hyeong-bae, a senior researcher at the Machinery Policy Center of the Korea Institute of Machinery and Materials, said, “In 2024, the machinery industry will face negative factors such as global geopolitical risks and high interest rates, as well as positive factors such as recovery in demand for IT products and expansion of infrastructure investment in the Middle East and other regions.” He added, “However, changes in the trade environment for the machinery and manufacturing industries due to political events around the world, such as the results of the U.S. presidential election, are expected to have a significant impact on the machinery industry in 2024.”