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U.S. protectionism poses threat to S. Korean economy: BOK official

2017/03/16 16:38

SEOUL, March 16 (Yonhap) -- A top South Korean central banker said publicly Thursday that the U.S. protectionism under the Donald Trump administration is one of the major challenges facing Asia's fourth largest economy.

"There is currently higher uncertainty over global economic conditions than any other time," Jang Byung-wha, senior deputy governor of the Bank of Korea (BOK), said in a forum co-hosted by the central bank and the Korea Chamber of Commerce and Industry.

He pointed out the political and economic policies of the so-called Big-Four global economies - the U.S., China, Japan and the eurozone.

If risk factors involving the Big Four materialize, he added, it could restrict a recovery in exports and expand the volatility of the financial and foreign exchange market.

"In particular, the strengthening of the U.S. trade protectionism and a change in China's policy on our nation can have a negative effect on our economy," he said.

Jang Byung-wha, senior deputy governor of the Bank of Korea (BOK), in a file photo provided by the BOK. (Yonhap) Jang Byung-wha, senior deputy governor of the Bank of Korea (BOK), in a file photo provided by the BOK. (Yonhap)

Trump demonstrated a strong trade protectionist stance throughout his presidential campaign trail. He is known to take a dim view of the Seoul-Washington free trade agreement (FTA) as well.

In a recent report, the U.S. Trade Representative argued that the FTA with South Korea led to a "dramatic increase" in the U.S. trade deficit, five years into its implementation.

It called for a comprehensive review of such trade deals.

The BOK official also cited potential risks from European economies including Brexit, French presidential elections and Greek sovereign debts.

"Doubts have been raised about whether the EU or eurozone system will last for long," Jang said.

Among Asian economies, China will have to continue efforts to address "structural vulnerabilities" including excessive corporate debt and surplus facilities.

On the Japanese economy, he said it remains unclear whether it will be able to post a sustainable growth and get out of deflation despite some signs of recovery driven by expansionary macroeconomic strategies.

lcd@yna.co.kr

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