BOK Gov. supports domestic consumption-oriented growth

TOKYO -- South Korea's top central banker said Saturday that emerging countries must beef up their domestic consumption via free trade agreements to maintain stable growth and help spur the global economy.

"Following the global financial crisis, the rapid growth rate in Asian and Latin American countries has played an important role in the recovery of the global economy," Bank of Korea (BOK) Gov. Kim Choong-soo said at the Asia-Latin America High Level Economic Policy Forum held in Tokyo.

The growth rate of such emerging economies, however, also tends to follow the footsteps of advanced countries, which are now caught in the doldrums, he added.

Kim suggested that emerging economies should bolster their domestic demand with trade deals to help strengthen the world economy.

Free trade pacts allow countries to increase local demand by reducing prices and bring deregulations to their industries, which will improve trade balance, he said.

The central banker pointed out stronger domestic consumption could reduce foreign exchange reserves or the current account surplus, calling for preventive measures to tackle the potential risks.

"Advanced countries holding key currencies must play their role to establish a global financial safety net to reduce vulnerability in domestic financial sectors," Kim said.

(Yonhap News)