Business fa proceeding botmHy In Seoul (otto-tog ihe death of rYerJdent Pak Cheat but last Friday TV Interns goaernnseat hai alrcaard thai eeoneenlcill remain Intact, and the Initial reaction In tha InternartonaI financial community don not reflect concern. If an orderly transfer of power oceun andpolnscalbltsSed, dlsruptlona to lha economy arawid be minimal.' I
ThereaktVtil of Sooth Korea wlP nonethelessifficult sat of econemfc rxe&toai, Including an economic slowdown, high Inflation, and rhdngame eeonooie eorvdlnor. lhat conlrlbuted to Prwldeffl PaVi
TW View Fr
Interim South Korraa usual approach lo domawk and
b attracting loudne* as adlvttws In Ihe aflermalb of
in
the death of PresidentChoem-liul Followingeath last Friday, ihe Deputy Prime Minblrr and Economic Planning: Board chief. Sin Hynn-hwik, announced that economic policy would irmaln Intact Sinear that the govrrnmrnl will auararrtee (ree oversea, economic activity and intemallonal trade relations and protect forrtgn eceawr-le eetMUes andIn Korea. Aeeordlnf to SU. price stability will remain the apvernrneot's lev economic prtorttr Buainro in Seoul reportedly haa been proceeding aa usual; all shops have remained openj
The International Reactloo
view of ihe detftoproefrts In South
Available Information Indicate, the Intemallonal financial community la taking a
Korcaf^
orderly trsnsHion of power and political Habd/ly. however, will
per eoemaio maintain IU eaav acres, lo IMemalional financial market, al favorable terms) ]
The Economy Awaiting the New frcsldenl
The fucceanr lo President Pak will have to come tot Ft difficult economic problems The fast growing South Korean economy,olitical plus for President Pak. hwd turned against ihe rAerwnrol9 Since the second quarter of ihe year _ -the economy has ben In the mldatuHnew. ahaasp wtth rtatag Unkraptciei and haah Inflation. Labor unrest grew as cash abort com panic* vera forced to lay offworkers and failed lo meet pevrolhj
eonomle difficulties stem In large part from ImUbnccs lhat developed during the past three yean of exceptionally fast growth Heal GNPerceni annuallyarking the first tune Sooth Korea had
(incases ofercent annually6 especially for eitctrical applUi.ee> and autoa. The South Koreanbit kmreaard dbpmsble Inrorne to ifparade hb diet, beef rorrrumptk*.percent*
"The South Korean economy, hoeewpr. became overheated8 and Inflation reached levels wel above those la Koreamater trading partners Consumer pricespercent lari year, according lo the official Indea which understatesncrease. The GNPetter Indicator of the true Inflation rale,6 percent The upward price spiral. In turn. Ugan to erode Korean esport competllive-
i of double digit growth. ThefoeW.ed irrrestrnroi rose v* percent per year
The Importance of maintaining lendernderscored bynflow] ef foreign capful Seoul will need to finance bra* parTrrnti deficits. Import liberalization, higher od prices, and lea rapid nport growth4 bUlkm current account deficit thistlraca aa Urge aa8 shortfall. Throughorta were only II percent8 levela beeauaeknvdown In the Middle Eaat development boom, Iricreaaed protect Ion urn In the developed countries,eakening In Korean comprtUI veriest. All of theue to higher prices; eiport volume wasercent In the first half of the year. Imports, on the other hand, are runnlwerce^ aheaJenectlnga Uberslltaikm ol Seoul', trade barrier,hrr oil and raw materialmport, have rim sharply
In eaptlal equipment and food an
acroB ihr board, wOh nrwcUDy
Seoularge pipeline of fundi and should have no trouble financing ihla
On the International front. Pakder^ra^^nrWmy.r
r
*'
deficit Another current account delicti on the orderillion apprtn liken- neat year. Principal repayment rrquirrmenU and ihe Deed lo add to foreign eichange reanvei mean* Seoul will have to"tract tome IS billion toill ton in foreign lone and ilnrtierm capital In ISflOj
Oatloofc
U an orderly transition of power occur* and politicalslabllshed,only minimal disruption to the eeonomy. An e> tended period ofwould create acetous dlatvpttoru, eepeetrlly aifect^Seoul'itap the International financial markm al favorable lenDaJ**^
M 1
arm Korean leadership wiB. In any event, face do-er realtar In urwenptoyment. and continued high tntTatton ai tha affect of tint year'i Maon measun- and higher energy costs week through Ihe economy. Barring serious political instability, we
Real CNP lo growercent between9 and mid-
i* Ursrmployrnerrt to reach about aJI percent of the labor force alomparedA-percent averagei: .-
Conaueaer prkea lo jncreast abouthis year withlight reduction In IS
The leas buoyant Korean eeonorJc outlook rlO add lo theacing tbe nrttigh level of bankraplcira rataea Ihe possibility of Inrt her bbor
the ruing
ftpenauonithe popuUee tor. sa even higher nandard of Using will also be moradifflcuh as tha.economy grow, leas
Original document.
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