Impact of U.S. govt shutdown on S. Korean market not significant: finance ministry

SEJONG, Oct. 1 (Yonhap) -- The immediate impact of the U.S. government shutdown would not be significant on the South Korean market, but the government will keep close tabs on any global developments as a prolonged impasse in Washington could intensify market volatility, the finance ministry said Tuesday. The U.S. government went into a partial shutdown as of 1:00 p.m., Seoul time, as lawmakers missed the deadline to pass a budget amid sharp differences in Congress over how to deal with President Barack Obama's health care program. This is the first time in 17 years that the U.S. government was forced to stop some of its operations. About 800,000 federal workers will face furloughs due to the shutdown with non-essential government programs also likely to be affected. Policymakers here have been paying close attention to what ripple effect the government shutdown in Washington could have on the Korean economy and financial market. The ministry convened an emergency meeting in the afternoon to review market situations with key market-related policymakers on hand. "As previous government shutdowns (in Washington) lasted for a short period of time, the issues involved are something that can be resolved and a possible impact has already been factored in the market, volatility does not seem to be significant at this moment," the ministry said in a statement issued after the meeting. "If the latest shutdown lasts for a short period of time just like in the past, the impact that it could have on our financial market and real economy is not going to be significant either," it added. The ministry still stayed cautious, saying that the government shutdown could undermine the U.S. economy by hurting private sector spending, which would eventually have a negative impact on the export-driven Korean economy. It also worried that a possible failure to raise its debt ceiling caused by such political impasse, a looming action by the U.S. to scale back its stimulus measures and the hike in consumption taxes in Japan could all serve as factors that increase market volatility. The ministry noted that it will keep close tabs on any global developments and be ready to take necessary action "swiftly" in accordance with the already prepared contingency plans at a time when the overall world economy does not stand on a solid footing. kokobj@yna.co.kr (END)