Bank of Korea Expresses Concerns Over External Risks

The Bank of Korea (BOK) has voiced concerns that the current external environment is more challenging than during the impeachments of Presidents Roh Moo-hyun in 2004 and Park Geun-hye in 2016. This heightened external risk is expected to amplify potential economic fallout as South Korea faces its third presidential impeachment in constitutional history.

Market Stability Measures

In a report titled 'Assessment of Financial and Economic Impact and Response Measures Following Martial Law,' the BOK noted that the won-dollar exchange rate stabilized briefly due to market interventions but has since shown volatility. The real economy is also showing signs of strain, with the Daily News Sentiment Index dropping sharply and credit card spending slowing down in December.

Historical Context and Current Challenges

The BOK highlighted that while political uncertainty lasting three to six months had limited economic impact in the past, today's worsened external conditions could exacerbate negative effects. Unlike previous impeachments, which coincided with favorable external conditions such as China's rapid growth and a booming semiconductor industry, current challenges like increased global trade uncertainty and intensified global competition in key industries are adding pressure.

Call for Bipartisan Cooperation

The BOK urged swift bipartisan cooperation to discuss a supplementary budget and pledged to work with the government to stabilize financial and foreign exchange markets by all means available. The BOK emphasized the need for proactive responses to the current economic situation and the importance of demonstrating that the economic system is functioning normally.

Potential Long-term Impact

The BOK warned that if political conflicts last longer than in the past, the negative economic impact may expand. Therefore, the BOK will work with the government and use all available measures to prevent increased volatility in financial and foreign exchange markets.