KDI Conference on "Reform Measures to Enhance Productivity in the Korean Economy" on the 11th
Cho Dong-chul, President of the Korea Development Institute (KDI), stated, "Despite the aftermath of martial law and the impeachment phase, the likelihood of a foreign exchange crisis occurring is slim," and predicted that the impact of martial law and impeachment on the economy would be short-term.
President Cho made these remarks during a press conference held after the ‘Reform Measures to Enhance Productivity in the Korean Economy’ conference at the JW Marriott Seoul on the 11th.
In response to concerns about the decline in external credibility due to recent domestic political uncertainties, Cho said, "It is true that the recent situation is having a negative impact on our economy," but added, "However, the possibility of a foreign exchange crisis like the one 25 years ago occurring is almost nonexistent."
He emphasized, "Our country has consistently maintained a current account surplus every year, which means that surplus dollars have been continuously invested overseas," and added, "It is hard to imagine a country with net external assets amounting to about 50% of GDP experiencing a foreign exchange liquidity crisis."
He continued, "Of course, it cannot be denied that there may be some reluctance from foreign investors to invest in Korea in the immediate situation, but such factors are not severe enough to lead to a national crisis." He also noted, "Our country has experienced an impeachment phase in the past, but even then, the foreign exchange market did not waver."
President Cho predicted that the impact of the martial law and impeachment phases on the economy would be short-term. He said, "Changes in the financial market, such as the exchange rate, over the course of a week were about 1 to 2%," and added, "Since changes in the financial market are variables that can quickly recover if the situation changes, the indicators show that there was not much fluctuation."
Regarding the situation where the need for a supplementary budget arises following the first-ever reduced budget bill passed by the National Assembly on the 10th, Cho refrained from commenting, saying, "I have nothing to say." He added, "Generally speaking, if fiscal spending decreases more than expected, it will not be positive for domestic demand, but next year, too many political variables are tied to the supplementary budget, so I have nothing to say."
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