| Deputy Prime Minster and Finance Minister Hong Nam-ki, center, speaks during the finance ministry's investor relations (IR) roadshow at the Saint Regis Hotel in New York, Thursday. / Courtesy of Ministry of Economy and Finance |
Foreign investors seem worried about Korea's labor policies and the possibility of its economy heading for deflation as many raised concerns regarding those issues during the latest overseas roadshow hosted by the finance ministry in New York, Thursday.
According to the Ministry of Economy and Finance, Deputy Prime Minister and Finance Minister Hong Nam-ki faced a series of questions from American investors about Korea's economy during the ministry's investor relation (IR) event under the topic of "Korean Economy, Making Headway for Sustainable Growth." The IR event was held at the Saint Regis Hotel.
PointState Capital Managing Director Peter Maa asked whether the Moon Jae-in administration would maintain its current labor-friendly stance.
Hong said the government will, but it is now necessary to adjust its pace.
"I believe the government's labor-friendly stance is a must in solving a number of Korea's structural economic issues," he said.
"However, the government has gotten a little too ahead of firms and market adaptation over the past two years."
Korea Society President Thomas Byrne asked whether Korea is entering a deflation phase as the nation's inflation rate dropped 0.4 percent year-on-year in September.
It was the second consecutive decline, a first in the country's history since the government started collecting related data in 1965.
Hong immediately denied the speculation.
"I don't think Korea is suffering deflation at the moment. It was a one-time thing," he said.
"The inflation rate was below the 0 percent mark last month thanks to the good harvest and low oil prices in the month. The nation's core inflation rate still stood at around 1 percent. The expected inflation rate stayed at the 1.8 percent to 2 percent level."
Bank of America Merrill Lynch securities division director Patrick Doyle expressed concerns over Korea's worsening exports over the past several quarters.
Hong attributed Korea's sluggish exports to the decline in chip prices.
"Weak chip prices were the reason behind Korea's poor exports over the past several quarters," Hong said. "I believe semiconductor prices are likely to hit rock bottom next year. If the prices recover, the nation's exports will naturally improve."
Hong, however, said that the ongoing trade dispute between the U.S. and China has posed a great threat to the future course of Korea's economy.
"China accounts for about 27 percent of Korea's entire exports. The ongoing China-U.S. trade row dragged on Korea's exports to China," he said.
"The current trade tension should be settled as soon as possible."