South Korea urgently needs to decide who will be the nation’s top economic policymaker to deal with growing uncertainties and prop up the faltering economy, experts said Sunday.

The parliament’s impeachment of President Park Geun-hye on Friday signaled the start of more uncertainties as to whether incumbent Finance Minister Yoo Il-ho will maintain his post or the Financial Services Commission’s Yim Jong-yong, who had been designated as new finance minister by Park last month, will take over.

Political circles are expected to start discussing whether to hold a parliament confirmation hearing on Yim, or recommend a new person through an agreement between the ruling and opposition parties. There is also the possibility that lawmakers will decide not to hold a hearing on Yim and seek a third person for the post.

Rep. Choo Mi-ae, leader of the main opposition Democratic Party of Korea, on Friday stressed the need for discussion, saying that “the parliament needs to promptly establish a control tower to oversee economy and people’s livelihood.”



Kang In-soo, head of the Hyundai Economic Research Institute, said whoever becomes the finance minister, it should happen as soon as possible, to stabilize the weak economy which is expected to sink deeper next year.

“Both Yoo and Yim are well aware of the economic policies and have carried out important tasks throughout their career. Whoever takes the post, that person should show consistency in policies,” Kang told The Korea Herald.

“Regardless of who takes over, it will be almost impossible to push new policies next year because there are too many problems already to deal with, such as mounting household debt and corporate restructuring.”

Sung Tae-yoon, an economics professor at Yonsei University, said the top economic policymaker should be someone both ruling and opposition parties should approve of.

“The ruling and opposition parties should let the economic team carry out economic policies independently from politics because both domestic and global conditions are in bad shape,” Sung said.

The imminent risk to the Korean economy is the US Federal Reserve’s expected interest rate raise at the Tuesday-Wednesday meeting this week. A rate hike at the Fed raises market interest rates weighing on Korean households who have to pay higher interest rates on their mortgage loans. It also puts more pressure on the central bank, which has to fight a massive exodus of foreign capital.

Especially when the local economy faces unstable market conditions, policy coordination between the Finance Ministry and the Bank of Korea will be very important, Kang noted.

The BOK is scheduled to hold its next base rate-setting meeting Thursday, one day after the Fed’s meeting.

“BOK is expected to take wait-and-see approach until the time schedule is fixed for the next presidential election,” Kang said.

Credit rating agency Moody’s said it was unlikely that the impeachment of Park would have implications for the regular running of the government and policymaking.

However, “negative confidence effects may affect growth,” Steffen Dyck, vice president and senior credit officer at Moody’s noted, adding that its 2.5 percent gross domestic product growth forecast has downside risks “if uncertainty about Korea’s leadership puts some spending and investment decision on hold.”

Amid falling exports, weaker consumption and sluggish corporate investment, the political risks have weighed on Korea’s 2017 growth outlook. A slew of economic think tanks recently have revised down the nation’s 2017 GDP growth forecasts to a low 2 percent range.

By Kim Yoon-mi (yoonmi@heraldcorp.com)