Government Establishes 'Ukraine Crisis Emergency Response TF'... "Thorough Inspection of Supply Instability Including Raw Materials"

Macroeconomic and Financial Meeting

[Asia Economy Sejong=Reporter Son Seon-hee] On the 27th, the government announced that it has established an 'Emergency Response Task Force (TF) for the Ukraine Situation' (tentative name) in response to growing concerns over Russia's invasion of Ukraine and the ensuing geopolitical instability.

Lee Eok-won, First Vice Minister of the Ministry of Economy and Finance, held a 'Macroeconomic and Financial Meeting' at the Bankers' Hall in Jung-gu, Seoul, in the morning and stated, "Military tensions are rising as Russia and the North Atlantic Treaty Organization (NATO) deploy troops near the Russian border, and the United States has issued a standby order in preparation for possible troop deployment," announcing these developments.

Russia and Ukraine are key producers of major international raw materials, including energy resources such as oil and natural gas, non-ferrous metals like aluminum, and international grains such as wheat and corn. On top of the global supply chain disruptions that have already caused raw material prices to soar, additional risk factors are emerging.

Regarding this, Vice Minister Lee said, "A large portion of our energy imports are covered by long-term contracts, and for international grains, we have already secured the necessary quantities through advance contracts?feed wheat until October this year and feed corn until June." He added, "In terms of exports and imports, the volume and proportion of trade with Russia and Ukraine are small." However, he expressed concern that "if geopolitical instability deepens and prolongs, there is a possibility that raw material price increases will accelerate and supply-demand instability may occur."

Accordingly, the government is expected to monitor the situation and develop response strategies through the emergency response TF. Vice Minister Lee explained, "Within the TF, there will be three divisions: supply chain, real economy, and macro-finance, to broadly and meticulously examine issues in sectors such as energy, raw materials, grains, exports, logistics, and financial markets. We plan to respond comprehensively by linking with the Macroeconomic and Financial Meeting and the Supply Chain TF (Economic Security Core Items TF)."

He also stated, "For domestic stockpiles where supply-demand instability is a concern, such as emergency oil reserves, non-ferrous metals, and rare metals, we will thoroughly check government stockpile inventories. In case of supply disruptions, we will be fully prepared to respond swiftly through emergency lending of stockpiled oil and release of metal stockpiles."