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KT Predicts 5G to Create US$42.2 Bn for S. Korea in 2030

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KT Predicts 5G to Create US$42.2 Bn for S. Korea in 2030

• 5G Report Covers Changes in 10 Major Industries, 4 Human Environments
• Automotive, Finance Sectors to Benefit Most from 5G Commercialization

KT Corp. (KRX: 030200; NYSE: KT), South Korea’s largest telecommunications company, has released the country’s first official report on how next-generation wireless network technology will benefit the country’s economy and society over the next 12 years.

At minimum, the commercial use of the fifth-generation (5G) mobile network technology is expected to create 30.3 trillion won in socioeconomic value in 2025, 1.5 percent of the country’s gross domestic product (GDP), according to the report, issued last week by the KT Economics and Management Research Institute (KT EMRI). The report forecasts that number will increase to at least 47.8 trillion won (US$42.2 billion), 2.1 percent of GDP, in 2030.

The Korean telecom leader is preparing to launch the world’s first nationwide commercial 5G mobile network in March next year. KT is working towards becoming a global leader in next-generation wireless services, such as augmented reality (AR), virtual reality (VR) and autonomous driving. It successfully showcased trial 5G services with the world’s first 5G-ready network at the PyeongChang Winter Olympic Games in February this year.

“Like past general-purpose technologies, such as electricity, steam engines and computers, 5G will pioneer the next digital transformation by driving innovation and evolution across our economy and society,” said Kim Hee-Su, head of the KT EMRI. “5G will be used in combination with other key future technologies like AI (Artificial Intelligence), big data and IoT (Internet of Things).”

The KT EMRI’s 5G analysis examined South Korea’s 10 major industries — automotive, manufacturing, health care, transportation, agriculture, security and safety, media, energy, logistics and finance. The research arm also analyzed the transformation of four different human environments, including urban and non-urban space, along with homes and offices.

The total amount of socioeconomic value to be generated by 5G technology by the 10 industries in 2030 is estimated at 42.34 trillion won. Another 5.41 trillion won will be generated by cities, non-urban areas, homes and offices, which will be improved by making use of 5G and related future technologies. Such improvement will not only see reduced crime rates, but also emit less carbon and introduce shorter transit times.

Among the 10 industries in the report, the automotive industry is predicted to gain the most in socioeconomic value: 3.3 trillion won in 2025 and 7.2 trillion won in 2030. Vehicle telematics, one of the primary forces behind the increase, will make vehicles safer, call roadside assistance at the touch of a button, dial 911 when the driver is in an accident and introduce other innovative features.

KT offered a glimpse into the automotive industry’s future when it showcased self-driving vehicles at the PyeongChang Winter Olympics earlier this year, making use of 5G’s ultra-low latency and hyper connectivity. The commercial use of next-generation technology will remake the automotive industry, enabling conventional vehicles to be replaced with autonomously driving ones, the report said.

Finance is expected to be second in industry impact with 5.6 trillion won in socioeconomic value in 2030, and it is followed by the media industry with 3.6 trillion won. In the media industry, the report said, 5G technology, because of its ultra-high capacity, will bring AR and VR applications to its end users.

Next are health care with 2.9 trillion won; transportation with 2.8 trillion won; distribution with 2.5 trillion won; energy with 1.1 trillion won; security and safety with 0.72 trillion won; and agriculture with 0.26 trillion won.

The estimates of socioeconomic value are conservative and could increase more as new services start to emerge in the future, according to the report. Information for the report was drawn from interviews with 27 experts and case studies from both KT and foreign network operators.

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Euro zone factories buzzing in February as demand soars

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Euro zone factories buzzing in February as demand soars 1

By Jonathan Cable

LONDON (Reuters) – Euro zone factory activity raced along in February thanks to soaring demand, a survey showed on Monday, although the burst of business led to a shortage of raw materials and a spike in input costs.

Restrictions imposed across the continent to try to quell the spread of the coronavirus have shuttered vast swathes of the bloc’s dominant services industry, meaning it has fallen to manufacturers to support the economy.

IHS Markit’s final Manufacturing Purchasing Managers’ Index (PMI) jumped to a three-year high of 57.9 in February from January’s 54.8, ahead of the initial 57.7 “flash” estimate and one of the highest readings in the survey’s 20-year history.

An index measuring output, which feeds into a composite PMI due on Wednesday that is seen as a good guide to economic health, climbed to 57.6 from 54.6, well above the 50 mark separating growth from contraction.

“Manufacturing is appearing as an increasingly bright spot in the euro zone’s economy so far this year,” said Chris Williamson, chief business economist at IHS Markit.

“The solid manufacturing expansion is clearly helping to offset ongoing virus-related weakness in many consumer-facing sectors, alleviating the impact of recent lockdown measures in many countries and helping to limit the overall pace of economic contraction.”

A Reuters poll last month showed the bloc was in a double dip recession and that the economy would contract 0.8% this quarter after shrinking 6.9% in 2020 on an annual basis. [ECILT/EU]

Rocketing demand for manufactured goods pushed factories to increase staffing levels for the first time in nearly two years.

But lockdown measures disrupted supply chains and factories struggled to obtain raw materials, leading to a big increase in delivery times.

“The growth spurt has brought its own problems, however, with demand for inputs not yet being met by supply. Shipping delays and shortages of materials are being widely reported, and led to near-record supply chain delays,” Williamson said.

Those shortages allowed suppliers to hike their prices at the fastest rate in almost a decade. The input prices PMI bounced to 73.9 from 68.3.

(Reporting by Jonathan Cable; Editing by Hugh Lawson)

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Strong exports lift German factory activity to three-year high in February – PMI

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Strong exports lift German factory activity to three-year high in February - PMI 2

BERLIN (Reuters) – Higher demand from China, the United States and Europe drove growth in German factory activity to its highest level in more than three years in February, brightening the outlook for Europe’s largest economy, a survey showed on Monday.

IHS Markit’s Final Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, jumped to 60.7 from 57.1 in January.

It was the highest reading since January 2018 and came in slightly better than the initial “flash” figure of 60.6.

Factories have been humming along during the pandemic on higher foreign demand, helping the German economy avoid a contraction in the last quarter of 2020 and offsetting a drop in consumer spending amid a partial lockdown to contain COVID-19.

Many manufacturers reported higher demand from Asia, especially China, as well as the United States and European countries, with export sales posting their biggest increase since December 2017, the survey showed.

Phil Smith, Principal Economist at IHS Markit, said supply chain pressures intensified as more firms reported delays than ever before in nearly 25 years of data collection.

“There looks to be further upward pressure on inflation in the German economy from supply bottlenecks and a subsequent surge in manufacturing input costs,” Smith noted.

The survey suggested that supply disruption is making it more difficult to replenish stocks, which could complicate production in the coming months, he cautioned.

“Nevertheless, the overriding sentiment for the longer-term outlook is optimism, with a record number of manufacturers expecting to see output rise over the next 12 months.”

Still, economists expect the economy to shrink in the first quarter of this year due to a stricter lockdown, which has shut most shops and services since mid-December, and freezing temperatures that slowed construction activity in February.

(Reporting by Michael Nienaber; Editing by Hugh Lawson)

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Tech demand drives Asia’s factory revival, China’s slowdown puts dampener

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Tech demand drives Asia's factory revival, China's slowdown puts dampener 3

By Leika Kihara

TOKYO (Reuters) – Solid demand for technology goods drove extended growth in Asia’s factories in February, but a slowdown in China underscored the challenges facing the region as it seeks a sustainable recovery from the shattering COVID-19 pandemic blow.

The vaccine rollouts globally and pick-up in demand provided optimism for a vast number of businesses that had grappled for months with a cash-flow crunch and falling profits.

In Japan, manufacturing activity expanded at the fastest pace in over two years while South Korea’s exports rose for a fourth straight month in February, suggesting the region’s export-reliant economies were benefiting from robust global trade.

On the flip side, China’s factory activity grew at the slowest pace in nine months in February, hit by a domestic flare-up of COVID-19 and soft demand from countries under renewed lock-down measures.

“The big picture, supported by the latest figures, is that China’s growth remains fairly robust, but it is slowing from previously very rapid rates,” Mark Williams, chief Asia economist at Capital Economics, wrote in a note to clients.

China’s was the first major economy to lead the recovery from the COVID-19 shock, so any signs of prolonged cooling in Asia’s engine of growth will likely be a cause for concern.

With the global rebound still in early days, however, analysts say the outlook was brightening as companies increased output to restock inventory on hopes vaccine rollouts will normalise economic activity.

“The recovery in durable-goods demand is continuing, which is creating a positive cycle for manufacturers in Asia,” said Shigeto Nagai, head of Japan economics as Oxford Economics.

“As vaccine rollouts ease uncertainties over the outlook, capital expenditure will gradually pick up. That will benefit Japan, which is strong in exports of capital goods,” he said.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 in February, the lowest level since last May but still above the 50-mark that separates growth from contraction.

That was in line with official manufacturing PMI that showed factory activity in the world’s second-largest economy expanded in February at the weakest pace since May last year.

Activity in other Asian giants remained brisk.

The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) jumped to 51.4 in February from the prior month’s 49.8 reading, marking the fastest expansion since December 2018, data showed on Monday.

In South Korea, a regional exports bellwether, shipments jumped 9.5% in February from a year earlier for its fourth straight month of increase on continued growth in memory chip and car sales.

The Philippines, Indonesia and Vietnam also saw manufacturing activity expand in February, a sign the region was gradually recovering from the initial hit of the pandemic. (This story corrects to add name of institution linked to analyst comment in paragraph 5)

(Reporting by Leika Kihara; Editing by Shri Navaratnam)

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