South Korea Sees Economy Slowing If Japan Acts on ‘White List’
South Korea Sees Economy Slowing If Japan Acts on `White List'
(Bloomberg) -- South Korea’s economy will likely grow less than forecast this year if Japan removes the country from a list of its trusted trading partners, a senior government official in Seoul said.
Removal from Japan’s list would be painful, affecting South Korea’s automobile, steel, aviation and electronics industries, among others, and pushing economic growth below the Bank of Korea’s latest forecast, the official said. The official didn’t provide exact estimates and spoke on condition of not being named, citing the sensitivity of the issue.
The BOK last month cut its 2019 economic growth forecast to 2.2%, while lowering interest rates for the first time in three years. Bank of Korea Governor Lee Ju-yeol cited mounting economic woes, including the U.S.-China trade war and tensions with Japan.
"Japan’s recent export restrictions against South Korea are a big risk," Lee said Thursday, according to a statement from his office.
Japan may decide as early as this week to take South Korea off the "white list" of nations it deems to be safe buyers of sensitive materials. It has already imposed export restrictions on some materials that are critical to South Korea’s production of memory chips and displays.
U.S. Secretary of State Michael Pompeo said Wednesday that he would urge the two U.S. allies to tamp down tensions during meetings with his Japanese and South Korean counterparts expected in coming days.
South Korea’s exports fell for an eighth straight month in July.
To contact the reporters on this story: Sam Kim in Seoul at skim609@bloomberg.net;Sohee Kim in Seoul at skim847@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Henry Hoenig
©2019 Bloomberg L.P.