193rd Ministerial Meeting on International Economic Affairs
Government Discusses Strengthening Korea-US Economic Cooperation
Prior to US Vice President Pence’s Visit
Deputy Prime Minister Yoo Il Ho presided over the 193rd Ministerial Meeting on International Economic Affairs on April 13, and discussed the global economy’s recovery trend and risk monitoring, foreign capital flows in emerging markets, as well as strengthening trade and economic cooperation with the US.
The following is a summary of the meeting.
Current Economic Situation
The government’s economic team has been working relentlessly amid recent uncertainties at home and abroad, such as stagnant growth in the global economy, Brexit, US presidential election, issues concerning trade, North Korea’s nuclear crisis, as well as domestic political circumstances.
Since the beginning of this year, the government has been implementing policies according to the principle of “Navigating Uncertainties” in order to turn external uncertainties into new opportunities that can help revitalize Korea’s economy.
Against this backdrop, Korea’s exports have grown for five consecutive months, and we have made successful infrastructure deals overseas. Furthermore, production and investment have improved recently, while consumption and employment indicators are also edging up.
With regard to China’s response to THAAD, the government has sought China’s cooperation to alleviate difficulties facing the Korean companies while filing a complaint at WTO. During the US-China summit, held on April 6-7, issues concerning Korea have been amply explained to China. The Korean government will continue to work hard to seek economic cooperation from China.
On April 16-18, US Vice President Mike Pence will visit Korea for the first time on a first leg of his Asia-Pacific trip. The Korean government expects that Vice President Pence’s visit will serve as an important venue for strengthening the mutually beneficial economic partnership with the new US administration.
Global Recovery Trend and Risk Monitoring
According to the IMF, the economies of both developed and developing countries are forecast to grow this year for the first time since 2010. The developed countries have shown steady recovery signs backed by the US economy’s solid growth and eurozone’s steady production and consumption.
China and India have maintained stable growth patterns while commodity-exporting countries, Brazil and Russia, have been gradually recovering from a recent slowdown.
Although recent recovery signs may have positive effects on the Korean economy, the government will continue to work persistently to manage external and internal risks as Korea’s economy is highly dependent on global markets.
Foreign Capital Flows in Emerging Markets
With the election of US President Donald Trump last year, emerging economies experienced foreign capital net outflows. However, since the beginning of this year, capital outflows have turned into net inflows, and Korea has maintained foreign capital net inflows for over three months, backed by solid external soundness, improving global investor confidence, and easing concerns about the possibility of abrupt rate hikes since the FOMC March meeting.
However, as there are internal and external risks that can affect financial capital flows in emerging markets, the government will closely monitor major events developing in the world and market situations in emerging countries, while also looking out for possible volatility in capital flows.
Strengthening Trade and Economic Cooperation with the US
The government has worked to establish and maintain a mutually cooperative relationship with the new US administration. To this end, the government has reaffirmed cooperation on the Korea-US alliance while sufficiently explaining our position on the Korea-US FTA, trade balance and FX policy to the US counterparts, using various governmental and private channels.
Through these venues, the US government has expressed its trust and commitment on the Korea-US alliance. However, on economic and trade policies, the US has yet to articulate detailed policy toward Korea as it raised the issue of trade imbalance with Korea while recognizing Korea’s efforts in successfully implementing the Korea-US FTA.
The Korean government will continue to work to strengthen the foundation of the Korea-US economic cooperation while increasing bilateral cooperation in new areas, such as energy. The government will also closely monitor issues related to the US Treasury Department’s FX Report, the Commerce Department’s report on trade deficits, the 100-day plan agreement between the US and China, and the US import restrictions on Korean products.
In particular, as US Vice President Mike Pence will visit Korea for the first time next week, the government will prepare for a constructive and successful meeting between acting President Hwang Kyo-ahn and Vice President Pence. The meeting is expected to provide an opportunity for expanding bilateral cooperation not only in diplomatic and security areas but also on economic and trade issues.