Presidential Office: "Global Complex Crisis Prolonged... Will Not End in Short Term"

Choe Sang-mok, Chief Economic Secretary: "This Year's Situation Has Become More Uncertain... Current Account Balance Expected to Improve Annually"

[Image source=Yonhap News]

[Asia Economy Reporter Baek Kyunghwan] Choi Sangmok, Chief Economic Secretary to the President, said on the 7th, "From the current situation, concerns that the complex crisis will prolong are becoming a reality." He specifically stated, "The complex crisis was triggered by supply chain disruptions, geopolitical wars, and supply-side crises," adding, "No matter how well the government implements policies, this crisis will not end in the short term."

On the same day, during a meeting with reporters at the Yongsan Presidential Office briefing room, Chief Secretary Choi said, "Looking at this year's situation from a broad perspective, macroeconomic indicators are expected not to deviate significantly from initial forecasts. However, recent accelerated interest rate hikes in the U.S., prolonged lockdowns in China, ongoing gas supply instability in Europe, financial instability in the U.K., and increased uncertainty have all contributed to this outlook."

He evaluated the current domestic economic situation as a "global complex crisis." Choi said, "Policy responses must also be multifaceted. Therefore, any country needs to comprehensively respond with macro policies such as fiscal and monetary policies, as well as micro policies like easing domestic supply chain costs, stabilizing living expenses, and supporting vulnerable groups." He continued, "No matter how well the government responds with policies, the crisis will not end in the short term. There is a high possibility that the crisis will be prolonged."

Regarding the already elevated inflation, he predicted that the inflation index growth rate would ease. However, he explained, "Ultimately, since domestic and international economies and all countries are revising their economic outlooks downward, we face the difficult task of managing the elevated inflation levels and the growing downside risks to the economy in a balanced manner."

He expressed a positive outlook on the annual current account balance. Choi said, "Our trade and current account balances are affected by the prolonged global complex crisis and the slowdown in import demand from countries purchasing goods from us." He added, "Although the current account recorded a deficit in August, it turned to a surplus in September. Monthly trade and current account balances will be volatile for the time being, but on an annual basis, the current account balance is expected to improve."

Additionally, he mentioned that discussions on next year's electricity and gas rate hikes will be held, considering their impact on inflation and ordinary citizens. Choi said, "This is a difficult task for the government," and elaborated, "The decision was made considering the financial structures of Korea Electric Power Corporation and Korea Gas Corporation, as well as the impact of our country's energy imports. We will review the impact on inflation and the difficulties faced by ordinary citizens by the end of this year and discuss next year's rate hikes."

Earlier, President Yoon presided over the 10th Emergency Economic and Livelihood Meeting at the Yongsan Presidential Office building in the morning, instructing, "Since this complex crisis is expected to last for a considerable period, the government must proactively establish safety nets to alleviate public and market anxiety." He particularly mentioned that the National Pension Service and the Bank of Korea have agreed to enter into a foreign exchange swap within a limit of 10 billion dollars by the end of this year, emphasizing, "In addition to the measures already announced to improve the supply and demand environment in the foreign exchange market, we will proactively expand safety nets."