'US stimulus wind-up will benefit Korea'

By Park Ji-won

The U.S. government’s move to wind up its stimulus policies will eventually have a positive effect on the Korean economy, according to a report by the LG Economic Research Institute, Sunday.

The private think tank said that Korean firms can benefit from the U.S. exit from quantitative easing because the economy depends heavily on the U.S. economy.

It explained that in the short term, the financial market will have to undergo market corrections, such as capital outflow and asset price falls, due to a fall in global liquidity caused by the so-called “Bernanke shock.”

However, since the end of the U.S. quantitative easing means a recovery in U.S. private sector, it will improve the exports of Korean firms in the long term, it added.

The Korean financial market took a major hit after Ben Bernanke, chairman of U.S. Federal Reserve, gave hints of the possible winding down of its stimulus policy on June 19.