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| Strategy and Finance Minister Yoo Il-ho, right, speaks at an economic ministers' meeting, Thursday. Other participants are Finance Services Commission Chairman Yim Jong-yong, left, and Bank of Korea Governor Lee Ju-yeol. / Yonhap |
By Yoon Ja-young
The government is scrambling to draw up preemptive steps to counter any changes in economic policies in the United States under Donald Trump.
At an economic ministers' meeting, Thursday, Strategy and Finance Minister Yoo Il-ho expected the strengthening of protectionism to increase uncertainties on the global financial market as well as the real economy.
"Risk aversion will increase in the global financial market amid growing uncertainties in emerging markets for the time being," he said.
He expressed concerns that protectionism will likely weigh on the global economy.
The finance minister said the government will take preemptive measures to contain volatility in the financial market through monitoring and stabilization measures.
Kim Hyung-joo, an economist at the LG Economic Research Institute said the financial market will continue fluctuating until it digests uncertainties to some extent.
"If Clinton stood for stability, Trump represents uncertainty in diverse policies. His campaign pledges lack concreteness," Kim said.
The market is unlikely to avoid further fluctuations depending on Trump's remarks on economic policies, he said.
While U.S. monetary policy will not be directly affected by Trump, Kim said anticipated uncertainties in the financial market under his presidency may make it difficult for the Fed to raise its key rate in December.
Foreign exchange rates are also expected to move widely.
Korea was included in the monitoring list of the U.S. department of treasury due to a trade surplus with the United States.
He also pointed out that innovation may slow in the global economy as the United States, which has been leading the field, will be turning to traditional manufacturing.
In the meantime, Commerce Minister Joo Hyung-hwan emphasized that the Korea-U.S. Free Trade Agreement (KORUS FTA) is benefiting the United States too. The U.S. President-elect has been denouncing the free trade pact as a "job killer."
"Despite a 10 percent drop in global trade since 2011, trade between the two countries surged 15 percent since the signing of the pact in 2011," Joo said.
He made the remarks at a meeting organized by the Federation of Korean Industries and the American Chamber of Commerce in Korea, Thursday.
He said the U.S. trade deficit with Korea dipped by $15.7 billion in 2015 due to the FTA, while Korean firms' investment in the United States increased following the deal creating over 10,000 quality jobs.
"Qualcomm, which started as a small company in the 1980s, made a leap forward as a global leader through cooperation with Korean companies," he said.
"The Korea-U.S. FTA will provide continuous opportunity for economic development of the two countries as the basis of mutual prosperity."
With massive infrastructure investment included in the pledges of the U.S. president-elect, Land Minister Kang Ho-in said this could be an opportunity.
"We should find opportunities amid changes following the U.S. election instead of threats. The ministry will closely monitor the pledges and policies of the U.S. president-elect," he said.
Kim Won-gi, an associate research fellow at the Korea Institute for International Economic Policy, said the Republican Party may lessen Trump risks as it has traditionally supported free trade.
