Korean Economy: Navigating Uncertainties

Investor Relations Conference in New York

Korean Economy: Navigating Uncertainties

Deputy Prime Minister Yoo Il Ho held an investor relations (IR) conference in New York on January 11. Some 170 foreign investors and officials from major global financial companies participated and showed substantial interest in the Korean economy. Among those in attendance were Citigroup's North America CEO William Mills, HSBC's Global Banking and Markets Americas CEO Thierry Roland, and JP Morgan's Public Sector Group Vice CEO Daniel Zeilkow.

In his speech titled, 'Korean Economy: Navigating Uncertainties,' Deputy Prime Minister Yoo emphasized that the Korean economy is strong and agile enough to withstand both internal and external uncertainties, and that the Korean government will continue to pursue its macroeconomic policies actively, and work on industrial restructuring, household debt management, and reforming dominant corporate structure. Major issues discussed by Deputy Prime Minister Yoo are as follows:

Uncertainties surrounding the Korean economy

Some of the overseas risk factors include additional interest rate hikes in the U.S., concerns over spread of protectionism, possibility of a hard Brexit, as well as China's soaring corporate debt level. And domestically, there are political instabilities surrounding the National Assembly's recent impeachment decision against President Park Geun-hye.

Strength of the Korean economy

Despite these uncertainties, the Korean economy has maintained strong fundamentals, shown by its solid external soundness indicators and fiscal capacity. Our constant effort to remake our economy from an export-driven and manufacturing-oriented economy to one that is based on information technology, medical and health care, and service industry has further strengthened our economy.

Progress of the Korean economy

In recent years, the Korean economy has shown more robust growth trends than some of the major developed countries. As a result, the overseas markets and rating agencies have given favorable assessments on our economy. For instance, Korea's sovereign credit rating has been on an upward trend since 2015, and our credit default swap (CDS) premium has decreased during 2016.

Major policy initiatives

The Korean government will continue to build on our economic strengths and seek policy solutions to effectively deal with various uncertainties.

• Apart from the 401 trillion won budget for this year, the government will execute an additional 20 trillion won stimulus plan as well as an unprecedented level of budget frontloading during the first quarter.
• Building upon the three-step industrial restructuring plan established in 2016, the government will continue to work persistently on Korea's industrial restructuring initiative.
• By improving the household debt problem in both quantitative and qualitative manners, and providing the necessary support for vulnerable groups, the government will continue to focus on effective management of household debt.
• The government will continue to seek reform in dominant corporate structure, encouraging transparency in accounting and information availability, and fostering open and fair business environments.
• In order to prepare for the future, the government will also seek policy solutions to the issue of low birth rates and aging society in Korea on a continuing basis.

The foreign investors and economists in attendance assessed that the IR conference was very timely and that it made them reassured about the strong fundamentals of the Korean economy, especially in light of the rising uncertainties at home and abroad. The participants also acknowledged that the venue was very helpful for understanding that the Korean government is taking prompt and appropriate measures to deal with both short- and long-term challenges.

Please refer to the attached PDF file