South Korea can manage U.S. debt woes, wary on Abenomics: finance minister

Thu Oct 10, 2013 11:09pm EDT
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By Paul Eckert

WASHINGTON (Reuters) - South Korea can cope with a U.S. debt stalemate if it is brief, and welcomes any boost Japan can get from Abenomics - unless Tokyo is using that policy to weaken the yen, the country's finance minister said on Thursday.

Minister of Strategy and Finance Hyun Oh-seok also said slower growth in China, South Korea's largest trade partner, would not create trouble for exporters if it meant a shift to consumption-led growth and away from high investment.

Hyun is in Washington for meetings of the G20 economies and the International Monetary Fund that opened amid a bitter U.S. political fight over raising the United States' $16.7 trillion debt ceiling that has sparked worries a default could trigger a financial crisis that would ripple around the globe.

"If it is a short-term phenomenon, I would not expect a big effect on the Korean economy," he told Reuters in an interview.

"It will be important to see how long it will last and the scope of the delay," added Hyun, who is also deputy prime minister of Asia's fourth largest economy.

Hyun gave a cautious endorsement of Abenomics - the three-pronged economic policy of Japanese Prime Minister Shinzo Abe that features massive monetary stimulus plan, flexible fiscal policies and structural reforms.

"Abenomics has a desirable aspect because it can positively affect the growth of the Japanese economy and contribute to global economic growth," he said.

But Hyun echoed other trade partners of Japan and a G20 statement issued last month in Russia that warned against policies to weaken currency to make exports more competitive. A weaker yen would hurt competing South Korean exports.   Continued...

South Korean Finance Minister Hyun Oh-seok speaks during an interview with Reuters in Seoul July 4, 2013. REUTERS/Kim Hong-Ji