World Economy

South Korea Economy on Thin Ice

Yim Jong-yong (R) speaks during an emergency meeting on Monday.Yim Jong-yong (R) speaks during an emergency meeting on Monday.

Finance Minister nominee Yim Jong-yong held an emergency meeting Monday and announced that the government will heighten its monitoring of financial markets, including foreign exchange transactions, as he considers the current economic situation close to a crisis.

“Our economy and the financial market is faced with difficult circumstances,” Yim, comparing the situation to waling on thin ice. “The situation that our economy faces today is different from that of 1997 or in 2008 … but if there is even a small crack in our risks management, our economy and the financial system will suffer a substantial impact, ” Yonhap reported.

Yim, who remains financial services commission chairman, held the emergency meeting as concerns grow over paralysis in government due to the Choi Soon-sil scandal on top of other uncertainties such as the US presidential election, mounting debt and lagging exports.

Yim has yet to take over the finance ministry and no coordination with the incumbent finance minister, Yoo Il-ho, has taken place.

It isn’t even clear if Yim will succeed Yoo as opposition parties have not approved the newly appointed Prime Minister Kim Byoung-joon. Although the finance minister doesn’t have to be approved by lawmakers as the prime minister does, President Park Geun-hye hasn’t finalized Yim’s appointing with the prime minister situation unresolved.

Park’s government has been paralyzed since the scandal erupted on Oct. 24 when broadcaster JTBC uncovered presidential friend Choi’s meddling in state affairs. The scandal has yet to subside despite Park’s two attempted apologies.

Major government projects, including next year’s economic direction, have been left hanging.

“We’re not sure what to do at this point,” said a government official who requested anonymity. “All projects are on hold when there are still tons of priorities, including follow-ups to recent policy announcements in the real estate market as well as negotiating with lawmakers and unions on labor reform bills. It seems all engines are on hold.”

The government’s economic policy for next year, which should be announced next month, could miss its deadline if Yim continues to remain a nominee. Even Yim succeeds Yoo Il-ho, he doesn’t have much time to implement new ideas.

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