South Korea will create a 11 trillion won ($9.50 billion) fund to support two state-run banks most exposed to shipping and shipbuilding firms currently being restructured. As Ivor Bennett reports, the China slowdown is partly to blame.
If the global economy hasn't given you that sinking feeling yet, then look no further. The shipyards of South Korea. It takes two years to build a ship this big, and work began when the weather was fair. But now they're preparing to batten down the hatches. (SOUNDBITE) (Korean) SOUTH KOREAN FINANCE MINISTER YOO IL-HO SAYING: "Our key industries like shipping and shipbuilding are being aggressively caught up by countries like China and management conditions have worsened due to weak global trade." The three biggest shipbuilders in the world are all Korean. Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering Between them they are preparing to sell over 4 billion dollars worth of assets. And find over 3 billion dollars through cuts. That means jobs - their workforce expected to drop by 30 percent drop by 2018. To limit the damage, the government, and the Bank of Korea, are creating a 9.5 billion dollar fund to help support the two state-run banks most exposed. SOUNDBITE (English) VICKY PRYCE, CHIEF ECONOMIC ADVISOR, CEBR, SAYING: "We're now talking about possibly having not much more than 2.5 percent growth in the world economy. At this stage of the cycle, from the recovery that we've seen since the financial crisis, that's not particularly high. And of course trade has played a very significant part in this because trade normally leads growth but this time it actually doesn't." And may not for some time. Korea's shipbuilders bracing themselves for three years of choppy waters.