Lee Chang-yong, Governor of the Bank of Korea, Meeting on Martial Law Situation
Short-term Shock Expected, but Long-term Stability Anticipated
Lee Chang-yong, Governor of the Bank of Korea, stated that although there was a short-term shock to the financial market due to the recent martial law incident, the market is currently stabilizing and is expected to recover to its pre-martial law state if no new shocks occur.
Governor Lee held a press conference at the Bank of Korea in Jung-gu, Seoul, on the morning of the 5th, saying, "The declaration of martial law caused a sharp rise in the exchange rate and affected the stock market, resulting in short-term impacts." However, he added, "Since the martial law was lifted after six hours and safety measures such as liquidity supply plans were put in place by the government, the market is now considered stable." He further stated, "If no new shocks arise, we expect the financial market to return to its normal state before the martial law in the long term."
Although the martial law incident caused significant shock overseas, it was resolved quickly, so its impact on national creditworthiness is judged to be limited. Governor Lee explained, "After the martial law incident, we received numerous inquiries from abroad?so many that it is difficult to respond to all?and we are still addressing them. Fortunately, since the martial law was lifted within six hours, it seems that overseas parties do not perceive any fundamental problems with Korea's democratic system."
He emphasized, "Regarding national creditworthiness, as S&P mentioned that there would be no short-term changes, it seems unlikely that national creditworthiness will be significantly affected if no new shocks occur."
He evaluated that the recent martial law incident will not significantly affect future economic growth rates or the path of the base interest rate. Governor Lee said, "Since the martial law was resolved in the short term, there is no need to change the economic outlook path announced last month under the current circumstances." He added, "Factors that could change our economic outlook now include the economic policy direction of the new U.S. administration, our exports, and competitive relationships with major countries, which are expected to have a greater impact than the martial law incident." He also noted, "The outlook path could change in the economic forecast in February next year based on new data that emerges."
Comparing the current situation to the impeachment crises during former Presidents Roh Moo-hyun and Park Geun-hye, he said there could be short-term effects on the economy. Governor Lee explained, "Looking at the two impeachment situations of former Presidents Roh and Park, there may be short-term economic impacts, but the medium- to long-term economic effects were limited."
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