Little change expected in Korea-U.S. economic ties

Seoul (The Korea Herald/ANN) - South Korea and the United States were expected to undergo no drastic change in their economic relations after Barack Obama was reelected U.S. president, analysts in Seoul said Wednesday.

Korea's major economic think tanks forecast that U.S. President Obama's reelection would help decrease uncertainties regarding his country's economic policies. But they raised doubt over the outlook for the U.S. economy next year, which is a key factor for Korea's continued economic growth. The U.S. is Korea's second-biggest export market.

"Policymakers and businesses seem to be relieved by Obama's victory, considering consistency in U.S. economic policies. But it is not certain whether Obama's new economic team can fix the imminent fiscal fiasco or not," said Ahn Soon-kwon, an analyst from the Korea Economic Research Institute.

Without an agreement in U.S. Congress by the end of this year, the U.S. will face sharp fiscal tightening - a "fiscal cliff" that includes $7 trillion worth of tax increases and spending cuts from January next year.

If the "fiscal cliff" is put in motion, the U.S. economy, which has been on a slow track to recovery, could stall, dragging the world economy down with it. Under this worst-case scenario, the strengthened Korean won would weaken demand for Korean goods in leading export markets, dealing a blow to the nation's growth.

"Republicans are expected to secure more seats in the upcoming election for the House of Representatives, so Obama's proposal to fix the fiscal issue will face opposition," Ahn said.

President Obama is expected to be grilled over domestic fiscal issues from the beginning of his second term, meaning trade-related issues will likely not top the new administration's agenda, a report from the Institute for the International Trade, a Korean economic think tank, said.

When it comes to trade-related policies, the Obama administration will use free trade agreements as a key tool for growth, while continuing to protect U.S. manufacturers. The IIT said the U.S. government could impose tariffs on Korean exports if it believes Korean products are disrupting market order or stifling U.S. manufacturers. In a recent case, the U.S. Commerce Department slapped charges between 18 and nearly 250 percent on Chinese solar panel producers in October.

"When it comes to the impact of the U.S. election result on the nation's key industries, renewable energy-related companies and green car makers will become key beneficiaries as Obama will continue to cultivate green businesses to create more jobs and for economic growth," said Kim Ki-bae of Samsung Securities.

Since his first term, President Obama has promised to halve oil imports by 2020 and cultivate renewable energy sources such as wind and solar power to make up energy losses from declining oil imports. The size of the renewable energy sector has doubled over the past four years thanks to broad support from the Obama administration.

A handful of Korean conglomerates like Hanwha Group shifted gear, in particular, to solar or wind power in line with the U.S. energy policy. However, they are suffering due to sluggish demand for solar power amid the global economic downturn and an influx of cheap Chinese products.

"The health-care industry also welcomes Obama's victory as the Obama administration promised to keep investments in the sector along with a reform for medical services to people in need," Kim added.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • A weekend of premium cars
    A weekend of premium cars

    Good news to all luxury car fanatics as PGA Cars, the exclusive importer and distributor of Audi, Porsche, Lamborghini and Bentley cars in the country, will be holding the PGA Cars Premium Festival from May 29 to May 31 at the PGA Center in Global City in Taguig. The 3-day event will showcase PGA’s latest […] The post A weekend of premium cars appeared first on Carmudi Philippines. …

  • APEC ministers to endorse Boracay Action Agenda
    APEC ministers to endorse Boracay Action Agenda

    Trade ministers at the Asia-Pacific Economic Cooperation (APEC) meeting in Boracay, Aklan agreed yesterday to endorse the proposed Boracay Action Agenda to the member countries’ leaders, presenting opportunities for global trade for micro, small and medium enterprises (MSMEs). In a press conference following the conclusion of the APEC Ministers Responsible for Trade Meeting, Trade Secretary Gregory Domingo, who also served as chairman, said ministers agreed to recommend the adoption of the …

  • Talks with China over sea row urged
    Talks with China over sea row urged

    The Philippines should engage China in bilateral talks in its efforts to maintain peace and order at the disputed West Philippine Sea, Sen. Francis Escudero said yesterday. Escudero supports the government’s move to bring the issue before international arbitration but also stressed the need for the Philippines to pursue talks with China. Escudero made the statement after UN Secretary General Ban Ki-moon on Friday called for a peaceful solution to territorial disputes in the South China Sea. …

  • House panel tackles bill on regular disaster drills
    House panel tackles bill on regular disaster drills

    The House committee on national defense is deliberating on a measure mandating the regular conduct of disaster risk reduction drills in educational institutions nationwide. Authored by Camarines Sur Rep. Rolando Andaya Jr., the bill mandates that risk reduction drills be held annually in all educational institutions throughout the country in coordination with the schools’ respective local government units. “The Philippines’ location along the Pacific Ring of Fire and close to the equator …

  • PCSO running out of funds
    PCSO running out of funds

    Philippine Charity Sweepstakes Office (PCSO) chairman Ireneo Maliksi has admitted that the revenue-generating agency is running out of funds as it continues with its mandate to provide financial assistance to indigent Filipinos. Aside from providing financial help to individual recipients, Maliksi cited at least 13 laws that mandates the PCSO to provide mandatory contribution to different government agencies. Just last week, PCSO released P100 million to the Commission on Higher Education as …

  • Cops receive mid-year bonus
    Cops receive mid-year bonus

    Active duty uniformed and non-uniformed personnel of the Philippine National Police (PNP)have received their mid-year bonuses. However, the bonus of personnel with pending administrative and criminal cases has been deferred as per administrative policy, according to PNP spokesman Senior Superintendent Bartolome Tobias. The PNP has released P1.9 billion for the mid-year bonus of the 155,000 active duty uniformed and non-uniformed personnel. …

  • Catholics organize to promote pope's climate change message

    NEW YORK (AP) — There will be prayer vigils and pilgrimages, policy briefings and seminars, and sermons in parishes from the U.S. to the Philippines. …

  • Forgotten for decades, fallen NY soldier finally honored
    Forgotten for decades, fallen NY soldier finally honored

    ALBANY, N.Y. (AP) — Carroll Heath didn't have it easy growing up in the Great Depression. His father wasn't around, his mother was a patient in a mental hospital and he kept largely to himself. Soon after graduating high school, he enlisted in the Army and wound up in the Philippines, where he's believed to have died sometime in 1942. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options