Japan's Ruling Coalition Victory May Hurt Korean Exports

Write : 2013-07-22 14:09:59 Update : 2013-07-23 10:56:59

Japan's Ruling Coalition Victory May Hurt Korean Exports

Anchor: The resounding victory by Japan's ruling bloc has raised concerns about the immediate future of the South Korean economy. The main worry is that an extension in Abenomics – massive fiscal stimulus coupled with a weak yen – will hurt South Korean exports. Our Kim In-kyung has more.
Report: Prime Minister Shinzo Abe's Liberal Democratic Party and its coalition partner scored a landslide victory in Japan's upper house election Sunday, paving the way to carry on Abe's economic program.
Abe's policies, dubbed Abenomics, refer to a massive monetary and fiscal stimulus package he introduced after his election in December 2012. He previously held the post for a year from 2006 to 2007. With goals of three percent economic growth and two percent inflation, Abe pledged to revitalize the Japanese economy by printing huge amounts of money.
Exit polls by Japan's Asahi Shimbun showed that 69 percent of voters have a positive view of Abenomics and 53 percent of supporters of the opposition Democratic Party of Japan share this view.
Abenomics will keep the yen weak and hurt South Korean companies competing with Japanese firms in the global market. Analysts predict that the dollar, which broke 100 yen this year, could break 105 yen at the end of the year and reach 110 in 2014.
Hyundai Research Institute predicted in a May report that South Korean exports will likely fall two-point-six percent this year if the dollar averages 100 yen in 2013. If the greenback surges to 110 yen or 120 yen, the research institute says exports may plunge as much as five-point-two percent or seven-point-three percent this year.
The Korea International Trade Association says a ten percent rise in the dollar against the yen could push down the operating profit of South Korean manufacturers by five-point-five percent.
Some economists contend that Japanese economic recovery on the back of Abenomics may help the South Korean economy as it could boost the global economy.
On the other hand, a failure in Abenomics may ease concerns about a downfall in South Korean exports, but could expedite the global economic slump.
Kim In-kyung, KBS World Radio News. 

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