By Kang Seung-woo
Staff reporter
Top economic officials are taking turns talking to domestic and foreign press on a mission to allay rising concerns about the Korean economy at a time when inter-Korean tensions are rising to a level rarely seen before due to Seoul's allegations that North Korea torpedoed its warship and the debt crises hitting Europe.
Korean stock markets have lost their momentum as a result despite a rally Thursday, while the won-dollar exchange rate has been moving in a direction that shows investors are running for the safety of the greenback.
On Wednesday, the Financial Supervisory Service (FSS) Governor Kim Jong-Chang took advantage of his scheduled luncheon with foreign news media to stress the fundamental strength of the Korean economy and its ability to withstand the impact of the double whammy.
Kim followed Strategy and Finance Minister Yoon Jeung-hyun, who used his strong pulpit to bring home the same message. Also Deputy Finance Minister Shin Je-yoon was dispatched to the United States to meet with global rating agencies and discuss what was expected to be incidental impact from the inter-Korean standoff.
"Recently, the downturn trend is due to a looming fiscal crisis in the euro zone and geopolitical risk from North Korea," Kim said. "But I do not think the South Korean economy is likely to be greatly affected by those issues.
"After the global financial crisis, Korea has been equipped with systems to handle any changes in the market."
The 61-year-old said that the current issues are about how long uncertainties in markets will last, not how serious they are.
"Those troubles may not be easily settled in the short term. However, the serious level is not that high, so the market in Korea will be able to regain stability quickly."
Korea, the fourth-largest economy in Asia, has something of a point to make, he said.
"Korea is sound in finance, posts a continuous current account surplus, and has a strong industrial base, along with making a faster-than-expected economic recovery," he said.
The Korean economy has put on a robust performance of late.
In the first quarter alone, Korea's gross domestic product (GDP) grew by 7.8 percent from a year earlier, one of the fastest among OECD nations.
It is also an early sign of self-sustaining, private-sector-driven growth taking hold. This is backed by robust exports as well as the return of consumption and investment to the pre-crisis levels. This is also an outlook shared by Moody's when it upgraded Korea's sovereign rating in early April.
The governor said the North Korean situation is placing pressure on the market, but the current geopolitical issue is not greatly different to previous situations that have plagued the nation.
"Although many sailors were killed in the incident and North Korea threatened to wage a war and sever ties with the South, I do not see any particular difference, compared to past affairs with the neighboring country," he said.
Yoon also said Wednesday that the nation's economy can cope with a jittery financial market, triggered by the sinking in March of the naval warship Cheonan.
"The country has experienced numerous economic difficulties related to tensions with North Korea, but all have been short-lived," he said.
Yoon also said that the South Korean economic fundamentals have the soundness and ability to handle the recent trouble.
"The country's fiscal health remains good and we have plenty of foreign currency reserves, so any shortfalls from rising inter-Korean tensions can be contained," he said.