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What needs to be done to shore up Korea's economy in times of crisis?

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By Yoon Hee-sung

Eximbank Chairman and President Yoon Hee-sung
Eximbank Chairman and President Yoon Hee-sung
In August, I attended the opening ceremony of KEXIM Global (Singapore), Korea Eximbank's subsidiary in Singapore. The event was organized to announce Korea Eximbank's resumption of operations in Singapore after 25 years of absence due to the Asian Financial Crisis, and also to launch the bank's new regional financing hub in the Asia-Pacific region.

As the youngest staff member in the original Singapore office at the time of closing in 1997, I am overjoyed to return to the bank as chairman and president, celebrating the reopening of a new corporation in Singapore.

Over the past 25 years, Korea has overcome economic crises and developed into the world's 10th-largest economy. Korea's economic accomplishments are often cited as a "textbook recovery" by many international news outlets. Likewise, Korea Eximbank has also grown into a leading policy institution in Korea, providing new standards for export credit agencies worldwide.

However, before we have the chance to fully celebrate and enjoy our achievement, another "economic crisis" is revisiting us once again.

When an economic boom continues and asset prices rise, some tend to mistakenly think, "This time it's different," and expect economic growth to continue indefinitely.

However, when the economy overheats, becoming derailed from its sustainable growth trajectory, certain symptoms might stack up gradually, and then suddenly, and turn into a crisis.

Since each crisis is unique and is disguised in new clothing every time, it is difficult to predict when and how we can best respond to it.

Currently, the global economy is sinking deeper into turmoil. The once-abundant liquidity, backed by prolonged low-interest rates and increased government spending during COVID-19, is now giving rise to a three-pronged challenge of high prices, high-interest rates and high exchange rates.

Amid tight monetary policy in major economies such as the U.S. and Europe, the global economy is facing an increasingly uncertain outlook.

The Korean economy is not exempt from this challenge. Unlike previous crises in which the economy managed to stabilize as a result of increased exports and decreased imports on the back of rising exchange rates, this crisis is unprecedented, marked by a deteriorating trade deficit despite soaring exchange rates.

However, for Korea Eximbank, which served as a safety valve for the domestic financial market amid the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis, the ability to overcome crises is woven into our DNA.

As Korea's benchmark foreign currency-bond issuer, we will contribute to stabilizing the foreign exchange market with a timely and adequate supply of foreign currency funds to the market.

In addition, we will support Korean companies with various financial solutions that fill financing gaps in a timely manner so that they can grow to become global competitors capable of weathering the crises.

Korea Eximbank will augment financial assistance for industries expected to drive national growth such as semiconductors, future vehicles, biotechnology and battery industries.

We will also reinforce our strategic approaches to the defense and nuclear power industries which are out of reach of commercial banks in terms of large long-term funds, on the condition that they comply with safety and environmental standards.

Last but not least, our bank will make efforts to secure essential natural resources including energy sources, minerals, and grains that have recently been suffering from supply chain disruptions.

Any new crisis requires a new set of responses. Just as we have already done in times of crisis, Korea Eximbank will take the initiative in supporting the country through any issues by deploying creative and innovative measures with our advanced financing programs.

The writer is the chairman and president of Export-Import Bank of Korea.

Yoon Ja-young


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