Report cites potential risks

The scaling down of the United States’ quantitative easing and the delayed economic recovery in emerging countries are among potential risk factors that could affect the international financial market in the second half of the year, according to a Korea Center for International Finance report released yesterday.

“Though the timing of when the U.S. will scale back its quantitative easing is flexible depending on how fast the American economy recovers, [we] expect it to begin by the end of the year,” the report said.

Other risk factors listed are failure to reach a debt ceiling agreement in the United States, potential shortcomings of “Abenomics” in Japan, policy uncertainty in Europe, side effects from the decoupling of monetary policy and geopolitical risks in the Middle East that could destabilize international oil prices.

Despite potential external risks, Korea’s top finance policy maker expressed optimism that the country will be able to reach 3 percent year-on-year growth in the second half of 2013.

“Growth can occur if the government revives the stagnant economic climate by introducing various revitalization measures,” said Hyun Oh-seok, deputy prime minister for economic affairs and finance and strategy minister. “The Bank of Korea is also supporting the government’s economic recovery measures by lowering the key interest rate by 0.25 percentage point [last month] and pushing an expansionary monetary policy by expanding loan ceiling to banks to 3 trillion won ($2.7 million).”

Hyun’s comments came in a policy briefing to lawmakers who are part of the National Assembly’s strategy and finance committee yesterday.

BOK Gov. Kim Choong-soo said, “In the second quarter, [Korea’s economy] will grow 0.8 percent compared to the first quarter and if such a trend continues, this year’s economic growth will exceed 3 percent.”

BY LEE EUN-JOO [angie@joongang.co.kr]