South Korean President Park Geun-hye said her nation will seek to join the Trans-Pacific Partnership (TPP) trade talks and wants progress toward a commercial deal with China this year, as an appreciating won threatens exports.
“We also hope to be able to smoothly move forward with our consultations with the TPP members so we can actually realize Korea’s formal participation in the TPP,” Park, 61, said in an interview at the presidential office known as the Blue House in Seoul on Friday. “This year we plan to work to make substantial progress in negotiating free-trade agreements with China, Indonesia and Vietnam.”
Park’s government for months has been considering whether to join the US-led TPP negotiations, which encompass 12 nations from Singapore to Chile. Expanded export opportunities would benefit South Korean manufacturers as they confront exchange-rate appreciation that has seen the won reach a five-year high against the yen.
Policymakers are focused on helping companies contend with a stronger won through measures including expanded insurance against volatility in the currency, Park said.
Park, speaking in the Rose of Sharon room of the Blue House, named after South Korea’s national flower, is also seeking expanded economic ties with India, Asia’s third-largest economy, where she will visit next week. Nuclear reactors offer one field of opportunity for South Korean companies in India, she said.
The trade agenda complements a domestic economic program focused on expanding opportunities for entrepreneurs and the spread of technology, along with addressing the under-representation of women in the workforce.
She followed up with measures to bolster a weakening real-estate market that weighed on households with record debt, along with incentives to encourage companies to increase investment.
“With the economy on a more stable footing this year, her priorities have shifted towards the longer term,” said Leong Wai Ho (梁偉豪), a Singapore-based economist at Barclays PLC.
“Her plan to deliver a more comprehensive three-year plan to boost [South] Korea’s potential growth rate — through economic restructuring and fostering innovation — will not be easy to deliver. But these are the sort of policies that will leave her administration with a strong legacy, if properly implemented,” Leong said.
The won, which gained 23 percent against the yen last year, could limit the acceleration in growth projected for this year, the South Korean Ministry of Trade, Industry and Energy said on Jan. 1.
The finance ministry forecasts gross domestic product to rise 3.9 percent this year after a 2.8 percent gain last year.
“The foreign exchange rate of course has a big impact as exports are an important part of this country,” Park said. “As we cannot just sit and watch hardships companies continue to go through there are indirect measures I mentioned earlier — including expanding FX insurance for small-to-medium sized companies, as a temporary measure. I don’t think we can make more efforts outside such measures.”
The nation typically buys or sells the US dollar to address won volatility, and South Korean Vice Finance Minister Choo Kyung-ho said on Friday that officials will “take swift, decisive actions to stabilize the market against herd behavior.”