Finance Minister Choo Kyung-ho, who doubles as the deputy prime minister for economic affairs, presides over an emergency economic meeting at the government complex in Seoul on Oct. 16, 2023. (Image courtesy of Yonhap)
SEOUL, Oct. 19 (Korea Bizwire) — Geopolitical risks stemming from the conflict between Israel and the Palestinian militant group Hamas are feared to cause a flare-up in inflation and ripple effects for the South Korean financial market and the real economy, the finance minister said Thursday.
Choo Kyung-ho made the assessment during a parliamentary audit of his ministry, vowing preemptive measures to manage prices and stabilize the people’s livelihoods as the economy has shown signs of a turnaround recently.
“The Israel-Hamas clash has not caused major disruptions in energy supplies, and it so far has caused a limited impact on our financial market and the economy,” Choo said.
“But we cannot rule out the possibility of suffering difficulties in terms of inflation again, and the potential jump in global oil prices is feared to cause volatility in the financial and foreign exchange markets and weigh on the real economy,” he added.
In response, the government will further enhance monitoring of the market and implement preemptive measures based on various scenarios.
Inflation has generally slowed down in recent months, and the government has forecast price pressures will begin to further ease around October, though consumer prices reported the highest on-year increase of 3.7 percent in five months in September.
Global oil prices have fluctuated since the onset of the war in the Middle East earlier this month on concerns about its fallout and the possibility of a wider conflict in the region.
In an effort to ease inflation, the government decided to extend the tax cut on fuel consumption, set to expire this month, through the end of this year.
It also plans to boost supplies of agricultural products and give a discount to stabilize the public’s livelihoods.
In an effort to boost growth momentum, Choo vowed to extend support to exporters by providing 365 trillion won (US$268.89 billion) in trade financing this year and greater tax benefits for corporate investment.
South Korea suffered a decline in exports for the 12th consecutive month in September, but exports appeared to have bottomed out in the third quarter on the back of rising global demand for semiconductors.
(Yonhap)
