S. Korea worries about DPRK provocations dragging down economic growth

South Korean President Park Geun-hye on Monday expressed worry that the Democratic People's Republic of Korea (DPRK)'s recent provocations may weigh down further on the already-struggling South Korean economy.

"Under the already difficult situations, heightened tensions on the Korean peninsula, caused by North Korea (DPRK)'s nuclear test and missile provocations, may serve as a greater burden on the economy," Park said during a meeting with senior presidential secretaries.

Park said that external conditions were much harder than initially forecast, citing slowdowns in emerging economies and oil-rich countries, and volatile stock markets globally.

The South Korean leader pointed out her country's export drop last month and a double-digit decline in January exports to China, South Korea's largest trading partner, as worrying factors.

South Korea's exports tumbled 18.5 percent last month, posting the fastest monthly fall in over six years. The exports, which account for around half of the economy, are estimated to have recorded a double-digit reduction in February based on data for the first 20 days of the month.

Tensions surged on the peninsula after the DPRK's first H-bomb test on Jan. 6, the fourth of its nuclear detonations, followed by the launch on Feb. 7 of a long-range rocket, which outsiders see as a prohibited test of ballistic missile technology.

Helping boost regional tensions, Seoul and Washington agreed to begin talks about the deployment in South Korea of a sophisticated U.S. missile defense system, called Terminal High-Altitude Area Defense (THAAD), on the same day when the long-range rocket, which Pyongyang dubbed a peaceful space program, was launched into orbit.

South Korea declared a plan on Feb. 10 to stop operations at a jointly-run factory park with the DPRK, which a day later, expelled all of South Koreans staying at the Kaesong Industrial Zone, shut down the last symbol of inter-Korean economic cooperation and froze all South Korean assets in the DPRK's border city of Kaesong.

Days after Pyongyang's nuclear test last month, South Korea resumed anti-DPRK propaganda broadcasts, which the North had denounced as a declaration of war, with a set of loudspeakers in frontline army units as part of its own punitive measures against the provocation. Pyongyang responded by conducting its own psychological warfare with the floating of anti-South Korea leaflets and the resumption of its propaganda broadcasts.

Worries escalated that rising geopolitical risks on the peninsula could weigh down further on the already-struggling South Korean economy. The country's top economic policymaker said Monday that he will make best efforts to minimize possible negative economic impact.

Yoo Il-Ho, deputy prime minister for economic affairs who doubles as finance minister, told foreign correspondents in Seoul that the government will "do its utmost to minimize the impact of North Korea (DPRK) issues on the (South) Koran economy" while continuing to monitor geopolitical developments.

Yoo said free trade agreements (FTAs) with China, Vietnam and New Zealand, which came into force last year, would contribute to South Korea's export growth.

He noted that China's shift to a more consumption-driven economy will provide South Korean companies with opportunities to export more consumer goods and services to China, South Korea's largest trading partner.

Asked whether the heightened geopolitical risks on the Korean peninsula may affect trade between South Korea and China, Yoo said that those will have little impact on economic relations between the two neighbors.

Yoo said that China, South Korea's largest trading partner, is more important than any in restoring Seoul's exports, adding that an increase in exports to China will be very necessary for South Korea's economy.

Source: Xinhua net