"Worsening Ukraine Crisis to Expand Real Economy Impact"…Government to Announce Comprehensive February TF Response Plan

TF Meetings Twice a Week

[Asia Economy Sejong=Reporter Kim Hyewon] The government, which recently formed an emergency response task force (TF) for the Ukraine crisis, will hold meetings twice a week and release a comprehensive response plan by next month.

On the 28th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, held a meeting of related ministers (Noksil meeting) at the Government Seoul Office to assess the economic impact of the Ukraine crisis and discuss future response directions.

The Ukraine crisis, combined with the possibility of early interest rate hikes in the U.S. and the spread of Omicron, is increasing volatility in financial markets and acting as a major risk hindering economic recovery.

Participants in the meeting believed that considering the scale of trade with Russia and Ukraine and the stockpiles of raw materials and grains, the short-term and direct impact would be limited.

According to the Ministry of Economy and Finance, the trade volume between South Korea and Ukraine accounted for only 0.1% of both exports and imports last year, a negligible level. Oil and natural gas are mainly under long-term contracts, and strategic oil reserves cover 107 days. Contracts for feed wheat have been secured until September-October, and feed corn until May-June.

However, the government agreed that if sanctions against Russia are strengthened and the situation worsens, there is concern that the impact on financial markets and the real economy could expand, and decided to proactively establish a response system and contingency plans.

Through the Ukraine crisis emergency response TF, led by Lee Ok-won, 1st Vice Minister of Economy and Finance, the government plans to conduct daily checks on supply chains, real economy, macroeconomics, and finance sectors, hold TF meetings twice a week to share situations and respond accordingly.

Based on the contents discussed in the TF, a comprehensive response plan by phase and sector will be prepared at the Foreign Economic Security Strategy Meeting scheduled for next month.

The Ministry of Economy and Finance stated, "In the supply chain sector, we will prepare customized supply stabilization measures by item; in the real economy, support plans for export, local production, sales channels, and finance; and in financial and foreign exchange markets, timely market stabilization measures will be implemented as needed, establishing detailed action plans by sector."

The government will also continuously identify and support difficulties faced by companies operating locally in Ukraine and Russia and operate communication channels with domestic companies concerned about related impacts.