South Korea is currently grappling with a complex crisis of both domestic and international challenges. (Image courtesy of Kobiz Media)
SEOUL, Jan. 26 (Korea Bizwire) — South Korea is currently grappling with a complex crisis of both domestic and international challenges. However, experts have critiqued the government’s policy responses to these external risks as insufficient.
A report titled ‘The Impact of External Risks on the Korean Economy and Industry,’ published by the Korea Institute for Industrial Economics and Trade (KIET) on January 25, contains insights from a survey conducted among 113 industry experts between August and September of last year.
The survey classified South Korea’s major external risks into five categories: economic, geopolitical, environmental, social, and technological. The experts evaluated the government’s response level across these areas, focusing on the risk severity, impact, and policy measures.
The findings revealed that the policy responses to external risks were deemed inadequate. Out of 27 sub-items related to the ‘Five Major Risks,’ nine areas were rated as ‘Very Inadequate’ (scoring 40 or below out of 100).
The remaining 18 areas were all rated as ‘Inadequate’ (between 41 and 60 points), with no categories receiving ‘Average,’ ‘Sufficient,’ or ‘Very Sufficient’ ratings.
The ‘Very Inadequate’ areas include global economic downturn, debt crisis, geopolitical conflicts, natural disasters and abnormal climate patterns, loss of biodiversity and ecosystem collapse, depletion of natural resources, global demographic changes, employment instability, and weakening social cohesion and increased polarization.
According to the report, “The economic, environmental, and social sectors were evaluated as relatively more inadequate compared to the geopolitical and technological sectors.
Most of these are structurally important within their sectors and have a significant influence on other risks, thus requiring comprehensive and thorough response strategies.”
Experts identified economic risks as the most concerning at present. The report also cautioned that the government’s focus on economic sector risks might lead to an underestimation of macro risks, emphasizing the need to broaden the scope to include other sectors.
When further dissecting economic risks, changes in global trade paradigms were seen as having the most negative impact. Other areas of concern include global economic slowdown, fluctuations in oil and raw material prices, heightened geopolitical conflicts, especially between the U.S. and China, natural disasters in the environmental sector, social polarization, and the growing threat of cybercrime in the technology sector.
Lee Won-bok, a deputy research fellow at the KIET, stressed the need for vigilance and response to interconnected and unforeseen risks.
“When unexpected risks become interconnected and spread, every sector of the economy can be endangered in an instant. It’s crucial to guard against risk contagion and systemic risks,” he stated.
M. H. Lee (mhlee@koreabizwire.com)
