Political Impeachment Scenario Expected to Leave South Korean Economy Unscathed
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Seoul, December 5 (NationPress) Bank of Korea (BOK) Governor Rhee Chang-yong mentioned on Thursday that the current political turmoil linked to the opposition's impeachment efforts against President Yoon Suk Yeol is not expected to have any significant effect on South Korea's sovereign ratings or growth momentum, considering the country's strong market fundamentals.
Rhee made this observation during a press conference in Seoul, just two days after Yoon unexpectedly declared martial law in a late-night address, which was rescinded roughly six hours later when the National Assembly voted against it. Following this, the opposition filed for Yoon's impeachment, as reported by Yonhap news agency.
"The Korean won experienced a decline due to the unsettling news. However, it is projected to recover gradually unless new shocks occur," Rhee stated.
In the wake of the overnight chaos, the Korean won dropped to a two-year low on Wednesday, and the stock market faced a steep decline amid significant foreign selling.
Rhee pointed out that the markets have begun to stabilize, and such effects are expected to be short-lived, dismissing concerns about the central bank altering the country's growth forecasts or monetary policy direction.
"The martial law declaration was driven solely by political motives. We can distinguish such political events from economic dynamics," Rhee emphasized, underscoring that economic fundamentals are independent of political happenings.
"While it is challenging to predict the developments regarding the impeachment process, which introduces uncertainties into the market, I believe that it is unlikely to cause a significant market shock based on historical precedents," the governor remarked.
Rhee clarified that the current political climate does not influence the bank's policy decisions or growth expectations.
"This situation is more about market psychology. I've received numerous inquiries and messages from various foreign investors, institutions, and associates. As this issue seems to have caused considerable concern among them, I am making efforts to thoroughly explain the circumstances while maintaining open communication," he added.
The martial law was brief, and the rapid political developments following its declaration underscore that the country possesses a mature democracy and adheres to a rules-based order, Rhee concluded.
