ID :
201123
Sun, 08/14/2011 - 05:08
Auther :
Shortlink :
https://oananews.org//node/201123
The shortlink copeid
Financial woes threatening S. Korea's growth target: think tank
SEOUL (Yonhap) - The latest troubles in the global financial market caused by a downgrade of the U.S. bond credit rating may result in South Korea's failure to achieve its annual growth target of 4 percent, a private think tank said Sunday.
The LG Economic Research Institute noted the financial turmoil could lead to a global economic slowdown, which in turn could lead to a drop in the country's exports.
The latest turmoil in the global financial market was sparked by a decision of Standard and Poor's Ratings Services to cut its credit rating of U.S. Treasury bonds by a notch to "AA+" from a sterling "AAA" earlier this month.
"In the event of a global economic slump, shipments of our key export items could further drop," it said in a report. "In this case, the country may not be able to achieve its growth target of 4 percent."
For example, the report said, global trade shrank 6.5 percent during the 2008-2009 global financial crisis, but the trade of durable goods, such as automobiles and electronic appliances, dropped 13.9 percent.
"Since the (2008) financial crisis, exports have led the country's growth while the domestic consumption has been stagnant. A drop in exports due to a slowdown of the global economy will have negative effects on the country's economy," it said.
With regard to the macroeconomic policy, the report said the country should maintain a contractionary policy for now, but switch quickly to an expansionary policy once inflationary concerns are removed by a fall in global oil prices and demand.
The LG Economic Research Institute noted the financial turmoil could lead to a global economic slowdown, which in turn could lead to a drop in the country's exports.
The latest turmoil in the global financial market was sparked by a decision of Standard and Poor's Ratings Services to cut its credit rating of U.S. Treasury bonds by a notch to "AA+" from a sterling "AAA" earlier this month.
"In the event of a global economic slump, shipments of our key export items could further drop," it said in a report. "In this case, the country may not be able to achieve its growth target of 4 percent."
For example, the report said, global trade shrank 6.5 percent during the 2008-2009 global financial crisis, but the trade of durable goods, such as automobiles and electronic appliances, dropped 13.9 percent.
"Since the (2008) financial crisis, exports have led the country's growth while the domestic consumption has been stagnant. A drop in exports due to a slowdown of the global economy will have negative effects on the country's economy," it said.
With regard to the macroeconomic policy, the report said the country should maintain a contractionary policy for now, but switch quickly to an expansionary policy once inflationary concerns are removed by a fall in global oil prices and demand.
