Fri, Jan 13, 2017 - Page 10 News List

S Korea likely grew 2.7% in 2016: official

UNCERTAINTY:Risks from abroad, including a new US administration, could have a greater impact than domestic politics on the nation’s prospects, the finance chief said

Reuters, NEW YORK

South Korea’s export-led economy likely grew by 2.7 percent last year, slightly above the latest government estimate, and felt little impact from the impeachment of its president, South Korean Minister of Finance Yoo Il-ho told Reuters in an interview on Wednesday.

A bigger risk to the economy was the “uncertainty from abroad,” including the incoming administration of US president-elect Donald Trump, Yoo said.

Yoo — on a visit to New York and Boston to meet with investors and bankers to gauge their views on South Korea, as well as gain insight into the US political landscape — said the previously unreported GDP revision could indicate solid growth for the first quarter of the year.

“We expected that the final revision of our estimation of last year’s growth rate was 2.6 percent, down from 2.8 percent,” he said.

“It turned out to be 2.7 percent at the end of ’16, which in turn means there is a possibility that the economy in Korea is not so weak as we expected, at least in the first quarter, judging from this 0.1 percent higher growth than we expected than the final revised value,” he said.

However, he said it was too soon to decide if South Korea’s habit since 2000 of implementing a supplementary budget to bolster a weak economy was necessary.

On Dec. 28, the government slashed the economic growth estimate for Asia’s fourth-largest economy to 2.6 percent for this year from an earlier estimate of 3 percent.

Yoo said that the corporate restructurings of the “so-called oversupplied industries” of shipping, shipbuilding, steel, construction and petrochemicals were ongoing.

“For the shipbuilding, I guess we may have tens of thousands [of lost jobs] in the process, but for the other sectors, it is really hard to tell,” Yoo said.

The government has been in turmoil since the impeachment of South Korean President Park Geun-hye in an influence-peddling scandal. A constitutional court must decide soon whether to uphold the Dec. 9 decision by lawmakers.

While consumer confidence has plunged to a seven-and-a-haf-year low in the wake of the vote, Yoo believes the nation is taking the vote in stride.

“We have not seen any real meaningful fluctuation or meaningful impact from inside politics yet. Maybe there is some kind of psychological factor on consumption or investment, but that doesn’t seem too big so far,” he said.

“In the near future, until the Constitutional Court’s decision, I don’t see a real big thing, big impact,” he said.

Yoo met with dozens of investors, including Goldman Sachs Group CEO Lloyd Blankfein and Blackstone Group CEO Stephen Schwarzman, who also chairs Trump’s business advisory council.

He said he wanted to get a read on how the incoming administration’s political maneuvers, trade policies and tax cuts might impact South Korea.

“My impression was that they found it difficult to exactly pinpoint the specific direction that the Trump administration will take in terms of the policies,” Yoo said.

“They seem to believe that the policies are going to be different from what the candidate Trump had said and what the president Trump is going to do,” he added.

Yoo also said he did not expect any big changes in the free-trade agreements between South Korea and the US.

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