Japanese Firms Worry About Korea’s Bubble Bursting
By Jane Han
Staff Reporter
One out of five Japanese companies, which moved out of prolonged recession after the crash of their country's bubble economy, said similar risks are clouding the Korean economy, according to a survey Tuesday.
A Korea Chamber of Commerce & Industry (KCCI) poll of 340 Japanese firms operating here highlighted a possible bubble burst as the biggest risk factor with 22.5 percent of respondents agreeing, while 13.4 percent cited labor-management relations and 9.9 percent noted pay hikes.
The KCCI quoted a Japanese businessman as saying, ``The Korean government is trying hard not to follow in the footsteps of Japan, but the risks still linger.''
The Japanese asset price bubble economy _ one of the world's most famous economic bubbles _ which burst in the early 1990s, usually refers to the time period from 1986 to 1990, a time of skyrocketing land and stock prices.
On the outlook for next year, 65.9 percent of those polled predicted the Korean economy to be similar to this year, while 19.6 percent were pessimistic, forecasting a downturn in 2008.
In a separate survey, among 350 Korean companies doing business in Japan, 41.3 percent cited the Japanese yen's depreciation against other foreign currencies, including the U.S. dollar and the Korean won, as the greatest risks to the Japanese economy.
The survey also showed that 69.3 percent of Korean companies welcomed a free trade agreement with Japan, while 71.2 percent of Japanese firms backed it.
Talks over the bilateral free trade pact have been on hold since 2004 due to the two sides' disagreement over key issues.