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S. Korea Risks Deflation
World Economy

S. Korea Risks Deflation

The South Korean currency may plummet 10% this year, according to the country’s largest brokerage firm. While that has some people worried, others say the drop could boost South Korea’s economy, CCTV reported. South Korea’s largest brokerage firm has released a report forecasting the nation’s currency will depreciate by as much as 10% this year. However, it also says a devalued won could help boost trade and stave off potential deflation. A weaker won could be a win for South Korea’s economy. Experts predict the Korean currency to weaken substantially against the US dollar in 2016. But what is of concern is just how far it could fall and how much it will fluctuate. As the currency continues to soften, South Korea is at risk of deflation. The nation’s consumer price index rose by a record low of 0.7% on-year in 2015. Meantime market forces, like lower oil prices, are also weighing on the won’s value. So policymakers are looking for other ways to drive economic growth in 2016.

 

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