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Uncertainty for U.S., China & Japan; Korea’s Low Debt to Absorb Shock

(SEOUL = Newsis) Rising uncertainty over the economic policies of the United States, China and Japan will lead to a volatile global market in 2014, but Korea’s low public debt and inflation rate will cushion the effect.

“Although the global economic growth and volatility of capital flows will constantly affect the Korean economy, policymakers are in a good position to prepare for policies as the level of national debt and inflation rate is relatively low,” said Bloomberg economist Tom Orlik last week.

He continued, “Global economic growth is the key to Korea’s economic growth as the country’s exports account for roughly half of the gross domestic product,” adding, “The country will suffer the impact of uncertainties in 2014, including the reduction of quantitative easing by the United States, policy direction of Japan’s Abenomics and the phenomenon of a weak yen and China’s reform and an attempt to move up the country’s value chain.”

He added that a low level of public debt will allow Korea sufficient time to tackle the downside risk caused by uncertainty regarding exports.

“The IMF [International Monetary Fund] expected an increase in total global gross product, from 2.9 percent in 2013 to 3.5 percent in 2014. The annual growth rate of global exports in the third quarter of 2013 rose significantly – by 2.1 percent from 0.7 percent in the second quarter – which is a good indication that world exports will rebound,” said Orlik.

He also explained that the rebound of exports will help burn out excessive investment in facilities, which recorded the highest level since the global financial crisis, and accelerate capital consumption.

Source Text

Source: Newsis(Dec. 12, 2013)

** This article was translated from the Korean.
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