A protracted war in Iraq could deal a blow to the car industry in Korea, an automobile trade association report said, according to the Korea Herald.
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The Korea Automobile Manufacturers Association (KAMA) report forecast that if a war in Iraq lasts more than three months, domestic vehicle production will fall by 9.5%, or 300,000 units, to 28.5 million units, the paper said.
Domestic demand for Korean vehicles is expected to further drop by 7% this year from a year ago to 14.5 million units, while exports bound for the United States, Western Europe and the Middle East are also expected to decrease by 7% this year from a year ago to 14 million units, said the report.
By contrast, if the U.S.-Iraq war ends quickly, the report expects domestic car production to pick up by 1.7%. The figure could be over 5% if the U.S. and European economies show signs of a rapid recovery after the war, added the report.
The report recommended that the government come up with proper countermeasures to cushion the economy from the negative effects of a prolonged war in Iraq.
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By GlobalDataThe measures, the report suggested, could include the streamlining of automobile taxation, as well as stabilising oil prices through more flexible taxation methods of transportation and encouraging the using fuel-efficient cars, the Korea Herald reported.
