Hyun remains confident in 3.9% growth for 2014Korean Finance Minister Hyun Oh-seok said that risks ranging from a U.S. fiscal deadlock to weakness in the yen will not derail a Korean economy set to rebound to its fastest growth since 2010.
While urging U.S. lawmakers to avoid a debt default, Hyun, 63, said he was sticking with a forecast of a 3.9 percent expansion for 2014, almost double last year’s pace.
He spoke in an interview in Washington, where International Monetary Fund, World Bank and Group of 20 officials are meeting.
So far, Asia’s fourth-largest economy has dodged the turmoil that hit emerging nations after Chairman Ben S. Bernanke signaled in May that the Federal Reserve’s quantitative easing may be tapered off. Samsung Electronics reported a record operating profit for the third quarter and the won climbed about 5 percent against the dollar over the past six months, the best performer in Asia.
“We will see growth accelerating next year,” Hyun said, adding that “some fiscal stimulus” will be needed.
Korea is trying to improve upon a 2 percent expansion last year, the weakest pace since the global financial crisis starting in 2008. In August, Hyun said the maximum growth rate that won’t fuel inflation is 4 percent, short of an average annual expansion of 5.2 percent from 2000 to 2007.
Talking about the U.S. fiscal impasse, Hyun said he hoped for an agreement to come “rather quickly.”
While headwinds for Korea include record household debt and a weaker yen, which aids rival exporters in Japan, stimulus measures helped the nation’s economy grow 1.1 percent in the second quarter from the first three months of the year, the fastest in more than two years. The Finance Ministry forecasts growth of 2.7 percent this year.
“It is true that Korea’s exports are seeing some impact from the weak yen,” Hyun said, adding that shipments to Japan and by steel and car makers were “especially affected.”
At the same time, advances in technology and product quality, free-trade agreements and the diversification of export destinations are helping exporters and shipments have improved from the second quarter of this year, he said.
Hyun is a former head of the Korea Development Institute, which was founded by former dictator Park Chung Hee, father of current president Park Geun-hye, and is the nation’s biggest state-run research center. As KDI’s president, Hyun advised Bank of Korea Governor Kim Choong-soo on policy until Hyun became deputy prime minister and finance minister in March under Park.
Hyun and the central banker followed similar paths, attending Kyunggi High School and Seoul National University and completing doctorates in economics at the University of Pennsylvania.