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Economy can handle some turmoil: MOF

May 24,2010
South Korea’s Vice Finance Minister Lim Jong-ryong said the country is “capable of absorbing” new economic turmoil due to the inter-Korea dispute over the sinking of the Cheonan and escalating fiscal woes in Europe.

Lim, who presided over an emergency meeting of economic officials yesterday, said fallout from the Cheonan disaster has largely been anticipated and its potential impact has already been factored into the markets.

Five senior officials from the Finance Ministry, Knowledge Economy Ministry and the Financial Services Commission had their first meeting yesterday as an emergency task force to discuss possible responses. Lim also said Deputy Finance Minister Shin Je-yoon will fly to New York to visit Moody’s Investors Service on Tuesday and Standard & Poor’s on Wednesday to explain the government’s responses to the Cheonan case.

“The Cheonan incident will have limited impact on our economy unless inter-Korea military tensions further escalate,” the Finance Ministry said in a statement released after yesterday’s meeting. The won weakened to its lowest level since October and local stock markets slumped after Seoul, wrapping up a monthlong investigation, announced Thursday that Pyongyang was behind the sinking on March 26. The credit default swap premium on five-year Korean Treasuries, a gauge of global investors’ risk perception of the country, surged to 1.47 percentage points on Thursday, this year’s record, before declining to 1.43 percentage points on Friday.

But Seoul’s financial turbulence has largely moderated since last Friday, since the market rout last Thursday largely stemmed from southern Europe’s debt crisis, said Lim.


By Jung Ha-won [hawon@joongang.co.kr]



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