ID :
195294
Sat, 07/16/2011 - 04:52
Auther :
Shortlink :
https://oananews.org//node/195294
The shortlink copeid
Storm in global economy
Storm in global economy
-Korea needs contingency plan-
Alarm bells are ringing in the global economy three years after the world???s most serious recession.
Italy, Europe???s third largest economy, is in fiscal trouble. The United States is in technical default due to soaring government debt. China is tightening its economy to stave off inflation. This may lead to China???s crash-landing. Japan is still in the throes of its post-tsunami recovery.
Noriel Roubini, a professor of New York University, predicts the global economy will encounter a ???perfect storm??? in 2013. He predicted the damage to the global economy will be widespread.
In other words, the continuing eurozone crisis, the U.S. fiscal trouble, and China's possible crash-landing might create a crisis that will shake not only the global economy but also the Korean economy.
The professor, described as Mr. Doom, warns that the U.S. economy is in a deep, ugly swamp, not in a soft patch. China's efforts to pull inflation back to the 5 or 6 percent range also will constrain growth and hit its trading partners, he said. Eurozone periphery nations like Greece, Portugal and Spain will continue to wrestle with their own debt problems, said Roubini, who predicted the 2008 global financial crisis.
Korea will not be immune from the emerging global economic uncertainties. The global stock and currency markets are in an unstable environment.
By global yardsticks, the Korean economy is in a relatively solid state. It is growing in the 4 percent range with its trade surplus continuing. Its fiscal debt, although growing at the fastest rate in the world, is still manageable.
Few question Korea???s ability to service its external debts of more than $380 billion. It has more than $300 billion in foreign exchange reserves.
The trouble is that Korea may face temporary liquidity trouble unless it manages its short-term debts well. A sudden withdrawal of foreign funds in the stock market will jolt the economy, pushing the won-dollar rate into wild fluctuation. Seoul should slash short-term debts, external liabilities maturing in a year, by curbing currency swaps, options and other derivatives trading.
There are many time bombs that if detonated, would shake the domestic economy. The most serious is the record high household debt. Koreans are more indebted than Americans now in terms of debt-to-income ratio. A prolonged stagnancy in the property market adds woes to individual borrowers.
The recent trouble involving mutual savings banks has ruffled the economy. Commercial banks, including KB, Woori, Shinhan and Hana, have been pursuing a growth-oriented business strategy. Their expansion at the threat of sacrificing risk management is also a concern. Fortunately, regulators have begun to tighten rules to rein in credit card spending.
Korea???s small, open economy is at the mercy of external factors. It cannot be shielded from global economic troubles. Now is the time to prepare for contingencies.
-Korea needs contingency plan-
Alarm bells are ringing in the global economy three years after the world???s most serious recession.
Italy, Europe???s third largest economy, is in fiscal trouble. The United States is in technical default due to soaring government debt. China is tightening its economy to stave off inflation. This may lead to China???s crash-landing. Japan is still in the throes of its post-tsunami recovery.
Noriel Roubini, a professor of New York University, predicts the global economy will encounter a ???perfect storm??? in 2013. He predicted the damage to the global economy will be widespread.
In other words, the continuing eurozone crisis, the U.S. fiscal trouble, and China's possible crash-landing might create a crisis that will shake not only the global economy but also the Korean economy.
The professor, described as Mr. Doom, warns that the U.S. economy is in a deep, ugly swamp, not in a soft patch. China's efforts to pull inflation back to the 5 or 6 percent range also will constrain growth and hit its trading partners, he said. Eurozone periphery nations like Greece, Portugal and Spain will continue to wrestle with their own debt problems, said Roubini, who predicted the 2008 global financial crisis.
Korea will not be immune from the emerging global economic uncertainties. The global stock and currency markets are in an unstable environment.
By global yardsticks, the Korean economy is in a relatively solid state. It is growing in the 4 percent range with its trade surplus continuing. Its fiscal debt, although growing at the fastest rate in the world, is still manageable.
Few question Korea???s ability to service its external debts of more than $380 billion. It has more than $300 billion in foreign exchange reserves.
The trouble is that Korea may face temporary liquidity trouble unless it manages its short-term debts well. A sudden withdrawal of foreign funds in the stock market will jolt the economy, pushing the won-dollar rate into wild fluctuation. Seoul should slash short-term debts, external liabilities maturing in a year, by curbing currency swaps, options and other derivatives trading.
There are many time bombs that if detonated, would shake the domestic economy. The most serious is the record high household debt. Koreans are more indebted than Americans now in terms of debt-to-income ratio. A prolonged stagnancy in the property market adds woes to individual borrowers.
The recent trouble involving mutual savings banks has ruffled the economy. Commercial banks, including KB, Woori, Shinhan and Hana, have been pursuing a growth-oriented business strategy. Their expansion at the threat of sacrificing risk management is also a concern. Fortunately, regulators have begun to tighten rules to rein in credit card spending.
Korea???s small, open economy is at the mercy of external factors. It cannot be shielded from global economic troubles. Now is the time to prepare for contingencies.
