A BANK of Korea (BOK) survey shows US policy risks have emerged as a major concern for local financiers and experts, following the presidential election.
Roughly 56 per cent of respondents in the BOK survey released on Thursday (Nov 21) were worried about US policy changes following the election earlier this month, in which Donald Trump won by a landslide. The concern ranked second in the list of risks for South Korea, only trailing elevated household debt.
Some 80 people, including risk officers, fund managers and financial researchers, took part in the annual BOK poll between Oct 29 and Nov 8, according to the central bank. Trump won the election on Nov 5 with a platform that includes higher tariffs for trading partners.
South Korea is heavily reliant on exports for economic growth and financial stability. It’s also among nations with the highest trade surpluses against the US.
Policy uncertainties may continue until Trump takes office in January and starts to implement his campaign pledges. Concerns may continue to weigh on monetary decision-making by the BOK and other global central banks.
While worries about the possibility of systemic risk have eased from last year in the survey, the potential for external headwinds to weigh on South Korea’s financial system has escalated, the BOK said.
The BOK will hold its next interest-rate decision next week with more economists expecting a hold at 3.25 per cent than a cut. The bank reduced its rate by a quarter-point last month, beginning to shift its policy focus to shoring up economic momentum from taming household debt.
The outcome of the US election is a factor that adds to policy uncertainties, BOK board member Kim Jong Hwa told reporters on Tuesday. Another member Shin Sung-hwan declined to speak on Thursday at a seminar with only days left until the next decision.
“There’s no question tariffs if implemented would have a negative impact on a country such as South Korea that exports a lot,” Cho Dong Chul, president of the Korea Development Institute, said at the same event on Thursday. BLOOMBERG
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