Global credit rating agency Standard and Poor’s(S&P) projects Japan’s trade restrictions could work as additional downward pressure on the South Korean economy.
Shaun Roache, S&P's chief economist for the Asia-Pacific region, said in a seminar in Seoul on Thursday that issues related to South Korea-Japan relations are unpredictable, but it's inevitable that trade conflicts affect the involved parties’ investment and growth.
He said the current tension between Seoul and Tokyo can amplify uncertainty and could make it difficult for South Korea to stabilize and recover investment, while creating additional downward pressure.
Regarding whether the trade spat will prompt S&P to further lower its 2019 growth outlook for South Korea, Roache said it's too early to predict whether and how much it will affect the South Korean economy.
On Wednesday, S&P slashed its growth projection for South Korea from two-point-four percent to two percent, but the assessment did not take the Seoul-Tokyo trade tensions into account.
On the latest downgrade, the S&P economist cited weak corporate performances in the first quarter and worsening global trade tensions. He said South Korea’s structure as an open economy with heavy dependence on manufacturing and exports was factored in as well.