Deputy Minister of Economy Warns of Possible Unprecedented Real Economy and Financial Complex Crisis

Emergency Meeting Convened on the 17th by Macroeconomic and Financial Departments

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyun-jung] Kim Yong-beom, Vice Minister of Strategy and Finance, mentioned the possibility that the Korean economy may face an unprecedented complex crisis in both the real and financial sectors due to the spread of the novel coronavirus infection (COVID-19). He emphasized that the government will take proactive and appropriate measures, and based on the current system, there is no need to be excessively anxious.

On the morning of the 17th, Vice Minister Kim convened an emergency meeting of macroeconomic and financial-related departments at the Government Complex Seoul to assess the domestic and international real economy and financial market ripple effects related to COVID-19. He stated, "As COVID-19 spreads worldwide, including the U.S. and Europe, concerns about a global economic recession are growing, and volatility in international financial markets is increasing." The meeting was held to diagnose the situation amid rising market anxiety despite major countries such as the U.S. taking sudden interest rate cuts. Officials from the Treasury’s Capital Market Division, Economic Analysis Division, International Finance Division, Foreign Currency Fund Division, and Government Bond Division attended.

Regarding recent global markets, he said, "Despite unprecedented monetary easing measures, the high uncertainty of COVID-19 has prevented investor anxiety from calming easily, reaffirming that thorough quarantine is key to stabilizing financial markets." He evaluated, "As the spread of COVID-19 continues and the negative impact on the real economy may begin to materialize through future economic indicators, the possibility of additional financial market instability cannot be ruled out."

Vice Minister Kim particularly anticipated that the impact on global financial markets and the real economy due to COVID-19 will persist for some time and mentioned the possibility of an unprecedented complex crisis. He said, "We are mindful of the possibility of facing a complex crisis in both the real and financial sectors that we have never experienced before," and urged attendees, "Please thoroughly check risk factors in each sector of the financial system proactively and implement market stabilization measures promptly and decisively, while making every effort to prevent credit crunches in advance." He added, "Going forward, through macroeconomic and financial meetings, we will closely communicate with related ministries and institutions such as the Financial Services Commission, Bank of Korea, Financial Supervisory Service, and International Finance Center to meticulously review the domestic and international economic and financial situations related to COVID-19 and response measures."

He also warned against excessive anxiety. He said, "Considering the sound fundamentals of our economy, policy response capacity, and the significantly improved robust financial system compared to the past, there is no need to be excessively anxious," and emphasized, "Following the central bank’s swift and bold actions, fiscal policy cooperation movements among major countries such as the G7 are expected to continue, and these measures are anticipated to contribute to market stabilization." At the G7 leaders’ video conference held the previous day, the leaders decided to mobilize all policy tools including monetary and financial policies, and requested that finance ministers coordinate weekly to develop timely measures.

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