“Businesses must reevaluate their investments in fragile economies, and be ready to respond preemptively to the risks through constant monitoring of their markets.” (image: KobizMedia/ Korea Bizwire)
SEOUL, May 29 (Korea Bizwire) – The latest report from the Hyundai Research Institute has revealed that South Korea is relatively safe from economic crisis, but warns that a dependency on trade with high-risk nations must not be overlooked.
The report evaluating the vulnerabilities of 26 developing economies around the world categorized the countries using five indices – inflation, ratio of fiscal deficit to GDP, public debt ratio, current account deficit, and short-term liabilities and foreign exchange reserves – and risk assessment criteria from the IMF.
South Korea, along with Taiwan, Thailand, the Czech Republic and the Philippines, was classified as safe in terms of economic risks.
High-risk nations were Ukraine, Brazil, South Africa, Egypt, Myanmar, and Argentina; medium-risk countries were India, Turkey, Vietnam, Malaysia, Poland, Greece, Russia, Mexico, and Colombia; and Indonesia, Hungary, Chile, Peru, UAE, and Qatar were classified as low risk.
Despite South Korea’s relative safety from an economic crisis of its own, high and medium-risk economies accounted for 17.6 percent of its total exports, leaving the country vulnerable to economic domino effects from less predictable countries.
“Businesses must reevaluate their investments in fragile economies, and be ready to respond preemptively to the risks through constant monitoring of their markets,” said researcher Kim Soo-hyung.
In comparison to trade risks, banks were relatively safe with their investments in emerging markets, with medium and high-risk economies accounting for 6.6 percent.
“South Korea must take advantage of the global economic recovery gathering pace to diversify and expand its exports,” Kim added.
By Joseph Shin (jss539@koreabizwire.com)
