According to Yonhap News,

(SEOUL=Yonhap News) Joo Hyunghwan, Vice Minister of Strategy and Finance, determined December 23 that external uncertainties, including the fall of global oil prices and volatile financial market caused by the Russian economic crisis, are not likely to substantially affect the Korean economy.

"We will respond to potential economic uncertainties with three risk management plans," said Joo.

He examined the uncertainties surrounding the international financial market at the macroeconomics finance meeting with participants from the Ministry of Strategy and Finance (MOSF), Bank of Korea, Financial Services Commission, Financial Supervisory Service and International Finance Centre Seoul.

"Low oil prices can be a burden in the short term as they exacerbate low prices, but they will be positive to the global economy, as corporate production costs will be reduced while purchasing power will be increased," said Joo.

“With regards to the financial uncertainties caused by the Russian economic crisis, the exposure of Korean financial institutions to Russia only accounts for 1.3 percent.

Therefore, financial uncertainties will not directly affect Korea greatly," said Joo.

However, it is important to keep an eye on economic trends, as investors may avoid risks when financial uncertainties hit emerging economies.

“The fact that the United States increased its key interest rate does not necessarily mean that we have to raise our interest rate imminently, but there could be market uncertainties surrounding when to increase the rate, as the Federal Reserve of the United States has shown the possibility of increasing its interest rate after next April,” said Joo.

The government will first analyze how low oil prices affect the Korean economy via the real and financial market with relevant institutions, and then establish a policy.

The government also plans to strengthen monitoring over emerging markets including Russia and consistently examine the outflow of foreign capital in Korea.

"We will do our utmost to stabilize the market by monitoring, so that the volatility of the foreign exchange market is not affected too much by external factors," said Joo.

"We will respond preemptively to potential economic uncertainties with three risk management plans," he emphasized.

The three risk management plans refer to the plans included in the economic policy direction for 2015: Responding to capital inflow, preemptive corporate restructuring and strengthening household debt management.

chopark@yna.co.kr

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Source Text

Source: Yonhap News (December. 23, 2014)

** This article was translated from the Korean.