Entry #4 20200622

Korea's exposure to G3 downturn modest

Korea faces a modest risk from a slowdown of the world's three biggest economies - the United States, the European Union and Japan - as the country is less dependent on exports than its Asian peers, a report showed yesterday.
Korea was rated as being "at some risk" from a looming downturn of the major economies, the Swiss bank Credit Suisse was quoted as saying in its February report.
The Korea Center for International Finance said Korea is more sensitive to G3 economic cycles than China and India, which were considered "the least at risk," while the nation is less exposed to G3 economies than Singapore, Taiwan and Hong Kong, which were "at high risk."
"Hong Kong and Singapore have high export exposures to the G3 economies and high linkages with the capital markets of G3 economies. It is likely that the Taiwanese economy will slow sooner because the country has a high export exposure and sees a protracted contraction in domestic consumption," the Korea Center for International Finance said in its report.
"Korea's export exposure is not big and its domestic consumption is recovering, but its short-term foreign currency borrowing is excessive," the report said.
Singapore, Taiwan and Hong Kong are forecast to see their growth rate decline by 3 percentage points, 1.7 percentage points and 1.5 percentage points, respectively, when G3 growth dips 1 percentage point.
The G3's slowing growth will have less of an impact on Korea, which would post a 1.3 percentage point fall in economic growth for every 1 percent fall in G3 growth.
The report also said Asia's economic growth will remain unchanged at between 7 and 8 percent as increased domestic demand will cushion the impact of a flagging global economy.
Korea's economy expanded by 5 percent in 2007, but the nation's central bank downgraded its economic growth forecast to 4.7 percent in February from its previous projection of 5 percent in December due to a slowing global economy and record-high oil prices.

http://www.koreaherald.co.kr/
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