Korea Capable of Coping With Financial Volatility

South Korea's top economic policymaker said Thursday that the country is capable of dealing with recent market concerns stemming from U.S. subprime mortgage defaults.

"The South Korean government and market participants are sufficiently capable of coping (with global market volatility)," Finance Minister Kwon O-kyu told reporters on the sidelines of a seminar in Seoul.

The minister highlighted that recent market fluctuations are "due to the U.S. subprime mortgage issue," but cautioned against excessive herd behavior.

Kwon also projected that the current global situation will not turn out to cause problems in terms of liquidity or credibility.

Vice Finance Minister Kim Seok-dong echoed Kwon's remarks, saying that the country's is unlikely to run in to problems from the recent market fluctuations.

"Our financial system has become healthy and authorities around the globe are stepping up efforts to stabilize the financial markets," Kim told a weekly press briefing.

During a speech delivered earlier at the seminar, Kwon stressed the need to bolster the country's service sector to secure new growth engines for sustainable growth.

"There is a foremost need to nurture the growth of the service and finance industries," Kwon said, adding that the country's service industry is "very weak" compared to those in advanced nations that contribute to employment and other economic factors.

Kwon forecast that the service sector will post strong growth, as employment in the fields of law, accounting, design and other service industries is on the rise.

The Bank of Korea, South Korea's central bank, announced earlier in the day that the country's service account shortfall reached US$1.4 billion last month, compared with a revised $1.8 billion deficit in September.