SEOUL — South Korean economists expect there to be little further impact to the nation’s economy from the long-expected removal from office of former President Park Geun-hye and the decision to hold a new presidential election within 60 days.
News of Park’s impeachment by the South Korean constitutional court has added to mounting concerns over the effect that Park’s scandal has had on an already sluggish domestic economy. Economists believe there is likely to be little further impact from the long-running scandal.
At an emergency meeting held after the announcement of Park’s impeachment, chairman of the South Korean Financial Service Commission Yim Jong-yong said there was no need for domestic and foreign investors to have any anxiety about the financial market, according to Yonhap News.
Local economists echoed Yim’s views, citing a positive outlook now that the uncertainty of Park’s presidency has been resolved. “Most people were expecting the decision to go in this direction, so the shock was not big,” said Kim Jinill, an economist and professor at Korea University. “I think [what happened are] all bygones, and in that sense, the impeachment should have no further negative effect.
“Stocks were up today, and the dollar exchange changed little. The KOSPI index moved up by 0.3 percent, and the small-company-oriented KOSDAQ was stronger by increasing 1 percent. I think this supports the evidence that the cloud of uncertainties are slowly clearing,” Kim said.
“The news of Park’s impeachment will definitely have a positive effect on consumer sentiment,” said Kang Soo-min, an analyst at Cape Investments and Securities.
Kang added that consumer sentiment had been “frozen” over the past few months because of the ongoing scandal, and retailers were hit hard. “Around protest areas there were traffic restrictions so a lot of the stores nearby reported sales drop during the past several months,” she said. “When there is something this big going on, people usually don’t feel enthusiastic enough to shop.”
South Koreans have been reluctant to shop during the nation’s “collective gloom,” Kim said. “The last few months, consumption was down quite a bit. It’s kind of awkward to consume as you normally do during this time of the year,” said Kim, citing that Christmas, the New Year and the Lunar New Year consumption were all affected.
During the somber mood of the political scandal, South Koreans even stopped consuming their popular local TV dramas, Kim said. “President Park loved watching [South] Korean dramas, so people even joked that she was the only person in the country who has been watching dramas over the past few months.”
In an address to the South Korean public on Friday afternoon, acting-president Hwang Kyo-ahn, emphasized that the nation was still in the midst of a “serious national crisis.”
“With uncertainties in domestic and overseas economies, we are experiencing complex difficulties,” he said. “Moreover, we must elect a new president within the short period of 60 days.
“The state must be stabilized as soon as possible,” said Hwang, who added that the government would be quick to respond to any upcoming economic or financial risks.
While the economic consequences of Park’s presidential scandal are no longer of urgent concern, Hwang’s speech also hinted at the economic implications of South Korea’s current THAAD-related diplomatic tensions with China.
If Chinese tourism drops the predicted 50 percent in coming months, South Korea’s GDP stands to fall 0.53 percent year on year. If that happens, the nation would experience a loss of 8.4 trillion won, or $7.3 billion, according to a report by Yonhap News.