Financial Times (FT) Interview
Lee Chang-yong, Governor of the Bank of Korea, expressed to foreign media that the tariff policies of the Donald Trump administration could pose a greater risk to South Korea's export-oriented economy than the martial law situation.
In an interview with the Financial Times (FT) published on the 6th, Governor Lee acknowledged that "the martial law situation will delay important structural reforms in the Korean economy and financial markets," but he drew a line by saying, "Compared to the intensified competition from China and the impact of Trump's tariff policies on Korean exporters, the economic impact of the domestic political crisis is limited."
Regarding the impact of the martial law situation on the domestic financial market, he said, "It did not last long and was relatively quiet," adding, "Through swift and comprehensive preventive measures, the financial market was quickly calmed and stabilized."
Governor Lee explained that the reason for lowering the economic outlook for this year and next year was due to Trump's tariff policies. He stated, "The tariff threat from the (Trump administration) is one of the main reasons we lowered our outlook for this year and next year," and added, "We revised down our export growth forecast for two reasons: one is the possibility of tariffs, and the other is that China's competitiveness is growing very rapidly, and we have realized that there is a very rapid oversupply of Chinese goods both inside and outside China."
Governor Lee also directly refuted claims that the recent martial law situation is evidence of why South Korea has not been included in the MSCI developed markets index. He said, "I understand if South Korea's developing country status is attributed to issues like North Korea or capital controls," but added, "However, I have never heard MSCI explain that South Korea was not included because its democracy is not sufficiently mature."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
