Export-reliant Korea’s overall economic growth in past years has been clouded by a prolonged weakness in global trade, a report by the United Nations Economic and Social Survey of Asia and the Pacific stated earlier this month.
While the economies of the Asia Pacific region are expected to achieve a 1.2 percentage point lower economic growth on average this year, uncertainty will be the biggest challenge for South Korea, an expert from a UN panel said Friday.
According to Kilaparti Ramakrishna, director of the subregional office for East and North East Asia of ESCAP, Korea is a particularly unique case in Asia as it is now in the process of forming a new governmental regime under President Moon Jae-in.
Kilaparti Ramakrishna, director of the subregional office for East and North East Asia of UN ESCAP, speaks during an interview with The Korea Herald on Friday at the Korea Federation of Banks building in Seoul. (Park Hyun-koo/The Korea Herald)
“One of the key challenges that Korea faces is rising uncertainty,” said Ramakrishna, during an interview with The Korea Herald. “Whether it is who you have in the White House, Brexit, various elections coming up in Europe and trade protectionism.”
“The Korean economy continues to be supported by very strong domestic demand,” he continued. “And it has effective governance and improved fiscal management. We need to strengthen them, we need to make sure that they don’t decrease. There is no margin for error because of what is going on elsewhere in the world.”
ESCAP also referred to the ongoing THAAD conflict with China and US protectionism as major short-term risk factors to Korea’s economy. However, while Ramakrishna says the future uncertainty of both issues is a serious cause for concern, he also noted that the global economy is cyclical by nature and that Korea’s new government must emphasize stability and growth to help combat fiscal downfalls.
“Our guess is that the new government is going to put a lot of emphasis on market stability,” says Ramakrishna. “And our guess is that it is unlikely to make radical changes in the economic policies.”
“President Trump has said that he will renegotiate all trade agreements, not only Korea’s Free Trade Agreement with the United States,” he says. “It is a concern, but renegotiating an agreement in itself is not a bad idea. You enter into these agreements with a certain reality that at a certain point in time, things will change.”
By Julie Jackson (email@example.com