Israel-Hamas conflict, how does it affect S. Korean economy?
우크라 전쟁에 중동 사태까지 한국 경제 불안요인은?
The Israel-Hamas conflict is in the Middle East, but there could be a ripple effect on countries on the other side of the globe.
South Korea is no exception.
In terms of the economy, major companies such as Samsung and LG Electronics with headquarters in the region are closely monitoring how the conflict develops.
Oil prices could jump if the war escalates as the region accounts for almost a third of global supply.
As money flocks to the safe haven of the dollar and gold, the won's depreciation could be exacerbated.
Some say the ripple effect will be limited, albeit with some uncertainties.
What are experts' views on the conflict's impact on Korea's economy?
For more on this, we have invited Professor Oh Joon-seok, the Dean of Sookmyung Business School.
Professor Oh, welcome.
We also welcome Professor Lee Munseob from the UC San Diego School of Global Policy and Strategy.
Professor Lee, welcome.
(OH) Q1. Due to the military conflict between Israel and the Palestinian Islamist group Hamas, leading South Korean companies are keeping close tabs on potential business fallout. Currently, how many South Korean companies are located in the region?
(OH) Q2. If the conflict escalates even more, what is the potential impact companies might see and are there any steps that could be taken to minimize such an impact?
(LEE) Q3. Let's move on to oil prices. What impact is this conflict between Israel and Hamas having on oil prices and how is the situation now?
(LEE) Q4. How much does South Korea rely on the Middle East region for oil? And if the conflict does escalate further --with Iran potentially engaged, how volatile do you believe the price of the oil might become?
(OH) Q5. Military conflict in the Middle East region has also affected the Fed's decision over interest rates. But before we get to that part, we need to first tap into whether inflation in the U.S. is being managed. How has the CPI been there and what can we expect ahead of new CPI data that will be released soon?
(LEE) Q6. Until even quite recently, Fed Chairman Jerome Powell said more hikes could be on the way. But as the new outbreak of violence has become a major concern for the Fed as well, dovish words hinting at less urgency over rate hikes have surfaced. What worries do the Fed have?
(OH) Q7. It seems investors have shaken off pressures driven by the Israel-Hamas conflict, with the Dow Jones and S&P500 unaffected. What is the outlook for stocks if the Israel-Hamas war becomes extended, could it derail the market rally?
(LEE) Q8. Let's take a look at how the Korean economy is being affected by the conflict. First of all, there were worries that this conflict would affect the won-dollar exchange rate, and make the won depreciation more serious. It has not shown significant volatility yet. but how do you see the situation regarding the won-dollar exchange rate?
(OH) Q9. If instability in the foreign exchange market worsens as the war escalates, are there any possible measures that South Korean authorities would be able to implemtent?
(LEE) Q10. What other economic difficulties could war have on the South Korean economy aside from what we have discussed?
(BOTH) Q11. Next week, the BOK is going to hold a rate-setting meeting. Inflation is not being contained well with the consumer price for September having increased by 3-point-7 percent on-year. However, given the geopolitical difficulties the world is facing, the BOK might also freeze the rate. What decision do you believe the central bank will make?
Whatever decision it makes, we will have the answers on the 19th.
Unfortunately, that's all the time we have for today's edition.
Thank you Professor Oh and Professor Lee for your time.
We appreciate it.
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2023-10-12, 18:30 (KST)