Rising Oil Prices Slowing Korea’s Economic Growth

There is a growing concern that record high oil prices and the 10-year high of local currency against the dollar will have a negative impact on the Korean economy.

In particular, many economic experts say the recent trend of oil price hike and the won-dollar exchange rate will continue into next year, and the government estimation of next year’s economic growth of 5 percent would not be easy to achieve. They stress that the new administration, which will take office early next year, should carefully look at the possibility of economic instability and come up with efficient countermeasures.
With the dollar remaining low, the won closed at 909.9 won to the dollar, the highest level in a decade. If the U.S. further cuts its interest rates at the end of this month, it would facilitate the weakening of the dollar, pulling down won-dollar rates below 900 to the dollar.

Some argue that further strengthening the won would deal a severe blow to the domestic exporters. According to a survey conducted by the Federation of Korean Industries on October 28 of the top 600 domestic businesses in terms of sales revenue, as many as 27 percent of companies responded that the won-dollar rates range between 900 and 910 won is Kore’s final profit margin.

Dong-A Ilbo