Korean economy faces heightened uncertainties

The South Korean economy has been facing heightened internal and external uncertainties on par with those in 2011, when the world was hit hard by the European fiscal crisis, a report said Sunday.

"Along with the local political turmoil, South Korea will likely struggle with intensified uncertainties that may surpass the 2011 level, stemming from the murky policies of the new US government and growing trade disputes," said the report by the Hyundai Research Institute.

The HRI-invented uncertainty index measured by 11 economic data, including the volatility of stock and foreign exchange markets and credit spread, reached 48 in December last year, up sharply from 37.7 in October.

The index soared to 87.6 in 2008 in the midst of the global financial crisis.

The December figure was only a few points shy of 52.8 tallied in 2011, when the European Union was struggling with fiscal debt problems in Greece and Spain.

Rising uncertainties at home and abroad dampen economic sentiment of households and businesses, dragging down consumption and investment.

"If the current situation continues further, the index may surpass the 2011 level," the HRI report said. "A delay of private consumption and investment will lead to a protracted economic slump." (Yonhap)