Fundamentals remain strong despite Greek shock: official
Korea's economic fundamentals remain strong despite global financial market uncertainty triggered by worries Greece will exit the eurozone, a government policymaker said Thursday.
Vice Finance Minister Shin Je-yoon said in an economic review meeting that political turmoil in Greece following anti-austerity election results have fueled overall market woes and affected global stock markets, bonds and foreign exchange markets.
He said while such uncertainty will pose continued downside risks, South Korea's economic situation has not been seriously hurt so far.
"Korea has sufficient foreign reserves, little problems acquiring liquidity and has the ability to deal with unforeseen developments," the official stressed.
He said there is no real need for local economic actors and the financial market to "overreact" to developments in Europe.
Shin added, however, that because the current situation is expected to exert negative influence on the global economy for some time, Seoul is in the process of checking its contingency plans to limit potential fallout and to stabilize the local market.
The Ministry of Strategy and Finance, the Bank of Korea (BOK) and the Financial Services Commission, which were also represented at the meeting, acknowledged the stock market and foreign exchange rates had been hit by eurozone woes, but said the general environment is not overly bad. Other factors weighing down growth are slower-than-expected growth in the United States and an economic slowdown in China.
They officials said currency swap arrangement reached between South Korea, China and Japan in October alleviated some fears.
Measures taken by local banks to expand foreign reserves coming into this year also contributed to the market's relative calm.
Financial regulators and the central banks said they will keep track of capital flow and conduct foreign liquidity stress tests to gauge the health of financial institutions. In addition, Seoul will take "fine tuning" steps to maintain the country's moderate growth momentum and help promote investments and jobs.
Korea's economy grew 2.8 percent on-year in the first quarter, down from 3.6 percent growth tallied for the whole of 2011. The government said Asia's fourth largest economy may grow 3.7 percent this year, although the BOK has said 3.5 percent growth is a more realistic goal. (Yonhap)