Economic chiefs seek to reassure on Trump

Top South Korean economic policymakers on Thursday strived to calm widespread jitters among key industries, emphasizing that the Korean economy could find new opportunities in US president-elect Donald Trump’s business-friendly policies.

“US President-elect Donald Trump’s policy directions towards the expansion of investment in social infrastructure and the revival of manufacturing could become new opportunities for us,” Finance Minister Yoo Il-ho said in an economy-related ministers’ meeting in Seoul, Thursday.

“We will analyze his campaign pledges, sector by sector, and closely check their impact on our economy including exports and trade.”

Yoo also said that the government will operate various cooperation channels with Washington to mutually benefit economic relations.

At a press meeting in Sejong, Vice Finance Minister Choi Sang-mok said Korea’s ample foreign exchange reserves and healthy status of external debts can weather the current uncertainty.

“While we are at the initial stage to set next year‘s economic policy, the government will maintain the existing stance on expansionary macro policies and come up with measures to reflect changes in recent economic figures,” Choi said.

Bank of Korea Governor Lee Ju-yeol said the local financial markets have begun reflecting positive expectations for Trump’s growth-friendly policies.

“Although short-term uncertainties have risen (following the US presidential election), financial markets are responding positively to expectations for president-elect Trump’s growth-friendly policies,” Lee told reporters after the economy-related ministers’ meeting.

“Trump’s protectionism in trade will have an impact on the economy but there is a market expectation that he will pursue growth-friendly policies,” Lee said.

Lee also said it was still premature to assess the overall impact in just one day, vowing to keep monitoring the markets.

With the US election behind, Seoul’s main bourse Kospi rebounded to rise as much as 1.9 percent on Thursday morning to near 2,000 level, on the back of a rise in US stocks. Dow Jones Industrial Index surged 1.4 percent in New York on Wednesday, and S&P 500, 1.11 percent.

Minister Joo Young-sup of the Small and Medium Business Administration stroke a chord with the finance minister and the central bank’s governor.

“Trump’s one of the key campaign pledges is to create jobs by facilitating traditional economy (such as manufacturing). While some SMEs might face negative impact, competent ones will find more room to make inroads into the US market,” Joo said in an emergency meeting with SMBA officials.

Joo emphasized that the government will help SMEs nurture stronger competitiveness in research and development to fight difficulties coming from Trump’s protectionist stance.

Meanwhile, representative business communities of Korea and US held an annual meeting on Thursday to discuss ways to boost bilateral cooperation.

Some 70 business leaders and high-ranking government officials from the two countries gathered at the Federation of Korean Industries’ head office. Participants included Korea’s Commerce Minister Joo Hyung-hwan and US ambassador to South Korea Mark Lippert.

Cho Yang-ho, Korean head of the joint Korea-US Business Council, was quoted by the FKI as saying at the closed meeting that he hoped “the meeting would contribute to boosting not only economic cooperation of the two countries but also the Korea-US alliance, their trade relations and their defense cooperation in Northeast Asia.”

However, Hyun Jung-taik, head of the Korea Institute for International Economic Policy, an economic think tank, warned that repercussions of Trump‘s taking office at the White House could be considerable.

“Countries heavily dependent on trade like Korea will be hit hard. First, he will go after China but Korea, which exports similar products, will be affected,” Hyun said in an interview with Yonhap.

The Fed‘s rate hike moves can become quicker under the Trump administration, which will severely take a toll on emerging markets as well as Korea, he said.

By Kim Yoon-mi (yoonmi@heraldcorp.com)