Bahk warns against protectionism
TOKYO — Strategy and Finance Minister Bahk Jae-wan warned about growing protectionism among advanced countries, Friday, and called for global economic powers to ensure economic cooperation to combat the current crisis and achieve sustainable growth.
The warning came during his speech made at the annual meetings of the International Monetary Fund (IMF) and World Bank (WB) in Tokyo attended by finance ministers and central bankers from 188 countries.
“Owing to strengthened international economic links, economic problems and policies of major countries can now spill over across the globe. And as global economic uncertainties intensify, countries could fall back on protectionism to safeguard their national interest , ” Bahk told the meeting.
“To achieve sustainable global growth, we need to overcome national interest and step up policy cooperation at the global level,” he added.
He expressed concern that the world economy faces many downside risks, citing the prolonged eurozone crisis and economic slowdown in emerging markets.
In order to overcome the tough times, the minister underlined the need to strengthen “all layers of international policy coordination.” In particular, he called for the eurozone countries to proceed with fiscal consolidation through vigorous restructuring aimed at restoring market confidence and urged the countries to exercise strong political leadership to upgrade the existing union.
The minister also emphasized the importance of strengthening surveillance and firewalls against future market turbulence at both regional and global levels.
“At the regional level, we need to strengthen surveillance and set up financial safety nets...at the global level, we should work towards strengthening the firewall and broadening global financial safety nets,” he said.
Bahk said it was “imperative” to forge ahead with fiscal consolidation to overcome the current crisis, but was no less important to push for such efforts in a balanced manner so as not to cause an economic recession.
During the meetings, World Bank President Jim Yong Kim praised Korea’s successful economic model, saying the country was vivid evidence that every economy has the potential to grow.
“As a child I emigrated to the U.S. from South Korea, a country which was then frequently described as a basket case. Korea’s economic success reminds us that we must never again be so immodest and pessimistic to assign such a label to any country,” he said.
Korea has transformed from a war-torn country into the fourth-largest economy in Asia over recent decades, becoming a role model for developing countries to follow. The world acknowledged the nation’s quick and efficient economic development by calling it “Miracle of the Han River,” comparing it to “Miracle of the Rhine,” the economic development of Germany after World War II.
The Korean-born president also gave the example of Rwanda to encourage small countries not to give up hope for economic development.
“There was a time when we thought small land-locked countries could never grow sustainably; Rwanda’s economic expansion of nearly 8 percent per year over the last decade has refuted that.