Most Ministry of Strategy and Finance officials view the economic fallout from the hosting of the controversial US missile defense system here as the most imminent economic challenge for the new president, a survey showed Tuesday.
In a survey conducted by local news media eDaily on 41 high-ranking officials from the Ministry of Strategy and Finance, most picked the risk posed from the Terminal High Altitude Area Defense system as the No. 1 risk to the economy.
An official was quoted as saying, “Several unexpected variables may come into play regarding foreign agendas, and THAAD is difficult to resolve as it involves various fields such as diplomacy, defense, and economics.”
He added, “There are possibilities that China may push forward an even stronger retaliatory behavior than before.”
Most of the officials also said that the impact government policies have on trade agendas are rather limited due to the uncertainties coming from external sources, eDaily reported. They were especially worried that Korea may fail to maintain a balanced relationship with the US President Donald Trump and China’s President Xi Jinping.
The damages caused by China’s retaliation against the deployment of THAAD may be enlarged, taking into account that 21 percent of Korea’s exports, worth approximately $10.5 billion, is dependent on China. The relationship with the US can not be ignored as the US Commerce Department and Treasury Department is to announce their reports on trade deficit and exchange rate on June and October respectively, the officials were quoted as saying in the survey.
The respondents also discussed rising risks from domestic economic situations, such as a potential recession that may be brought about by stagnation.
The Korea Development Institute had predicted that the rate of economic growth will show a decline from 2.8 percent in 2016 to 2.6 percent in 2017 and to 2.5 percent in 2018.
“While the index during the first quarter seemed to be rising, there is always a chance that it might worsen in the next quarter and the situation with Daewoo Shipbuilding is not over,“ an official was quoted as saying.
“Short-term economic stimulus measures are to most likely appear in such cases, which means that mid- and long-term reforms on labor, public policies and the fourth industrial revolution may be overlooked.”
Another official also pinpointed that political uncertainties may even threaten economic stability.
“No matter who comes to power, the opposition party is likely to become the majority, which increases political uncertainty and creates more confusion,” he said.
According to the Korea Manifesto Center, the finances required to fulfill their pledges for each candidates were: 178 trillion won for Moon Jae-in, 200 trillion won for Ahn Cheol-soo, 208 trillion won for Yoo Seong-min, and 550 trillion won for Sim Sang-jeung. Hong Joon-pyo did not disclose his budget planning.
Many officials were also quoted as saying that reviewing current economic policies is necessary to go through a major economic reform.
“There are limits to the trickling down effect of exports and development policies based on large conglomerates. We need to break off from deregulation,” said an official. (firstname.lastname@example.org)