Korean Gov't Needs to Be More Proactive in Economic Stimulus...HI Investment
Korean Gov't Needs to Be More Proactive in Economic Stimulus...HI Investment
  • Korea IT Times
  • 승인 2014.12.29 19:20
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An analyst advocated in a research report that Korean monetary authorities must be more proactive in stimulating the economy including lowering of the benchmark interest rate in order not to be sandwiched between the two activist governments of China and Japan. HI Investment & Securities said this in a report titled "Korea Sandwiched between China and Japan" published on December 28.

According to the report, the People's Bank of China relaxed on the 24th regulations related to the loan-deposit ratio so that banks can lend more. Park Sang-hyun, analyst with HI Investment & Securities, said, "Although the Chinese government has not yet set out to take full-fledged stimulus measures, this is a sign enough that it won't sit still letting the economy languish and the credit crunch risk spread.

In the same way, the Japanese government held a Cabinet meeting on the 27th and decided to inject an emergency fund of 3.5 trillion yen (US$29.1 billion) as part of a stimulus package. It is expected to raise the nation's GDP growth rate by 0.7 percentage point.

The analyst urged in the report that the Korean government do the same. Otherwise, the stimulus measures in the nations in the east and west would impose a burden to the domestic financial market, he said. The report added, "As the won-yen exchange rate falls to the level of 914 won per 100 yen, a record-low level in six years and ten months, Korean exporters will find it increasingly hard to compete with Japanese rivals. The monetary authorities need to cut the interest rate further in the New Year while at the same time expanding fiscal spending."

Source: The Korea Economic Daily


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