Gwangju Research Institute "Kumho Tire Gwangju Factory Fire Lowers Gwangju Economic Growth Rate by 0.32%"

【Financial News Gwangju=Hwang Taejong Reporter】An analysis has been raised that due to the fire accident at the Kumho Tire Gwangju Factory on the 17th, the annual production in the Gwangju area would decrease by 450 billion won, added value would decrease by 155.1 billion won, employment would decrease by 2,218 people, and Gwangju's real economic growth rate would fall by 0.32%.
 Gwangju Research Institute announced on the 29th through the 'Gwangju Policy Focus - Estimation of Economic Loss and Countermeasures for the Kumho Tire Gwangju Factory Fire Accident' that it analyzed the negative impact of this fire accident on the regional economy.
 It also explained that to quantitatively estimate the economic loss and impact on economic growth due to the fire accident, it used the regional industry linkage analysis method to estimate the economic loss due to the decrease in tire production and the economic loss due to the decrease in regional consumption due to income reduction such as payment of wages during business suspension.
 As a result of the analysis, it was estimated that this fire would cause an annual production decrease of 748.6 billion won nationwide (including 450 billion won in Gwangju), an annual added value decrease of 260.9 billion won (including 155.1 billion won in Gwangju), and an annual employment decrease of 3,514 people (including 2,218 people in Gwangju). It was estimated that the rubber and plastic manufacturing industry, wholesale and retail industry, transportation service industry, other personal service industry, and restaurant and accommodation industry would be greatly affected by industry sectors within the region.
 The institute particularly focused on the impact of the fire accident on Gwangju's real economic growth rate. The estimated decrease in added value in Gwangju (155.1 billion won) corresponds to the recent two-year (2022~2023) average of Gwangju's real GRDP of 48.2834 trillion won, and it was estimated that the real economic growth rate would fall by that amount.
 Previously, the Gwangju Research Institute had projected Gwangju's real economic growth rate for 2025 to be at the level of 1.4%~1.7%, and applying the estimated decrease in added value due to the Kumho Tire Gwangju Factory fire accident, it was concerned that Gwangju's real economic growth rate for 2025 would remain at the level of 1.08%~1.38%, leading to a concern of entrenched low growth.
 The institute pointed out that it is urgent to designate a special disaster area and an employment crisis area to minimize the negative impact of the fire accident on the regional economy. It also suggested that above all, it is urgent to normalize production at the Kumho Tire Gwangju Factory and to promptly conclude discussions on relocating the Gwangju Factory.
 Along with this, it emphasized that the tire industry has a high degree of forward and backward linkage with regional companies, including the automobile industry, which is Gwangju's main industry, and that policies to support stable management of related companies and to increase the rate of local parts procurement are necessary.
 In particular, it suggested that to minimize the negative impact on the wholesale and retail industry, personal service industry, restaurant and accommodation industry, which have a high proportion of small businesses in the region, and to promote a virtuous cycle of the regional economy, it is necessary to designate a special disaster area and to provide livelihood support for workers related to the employment crisis area by using local currency as a means of payment, and to increase the issuance amount of local currency to enhance real income and promote consumption of locally produced goods.
 It also stated that due to the contraction of the regional economy caused by the fire accident, there are limitations in utilizing only regional resources, so it is necessary to strengthen regional marketing and develop region-specific programs linked to the '2025 Visit Gwangju Year' to promote regional consumption through the influx of foreign tourists.

hwangtae@fnnews.com Hwang Taejong Reporter