South Korean Finance Minister Discusses Israel-Hamas Conflict’s Potential Economic Impact

SEOUL — South Korea's Finance Minister Choo Kyung-ho warned on Thursday of the potential ramifications the ongoing conflict between Israel and Hamas could have on South Korea's financial market and economy. He made the comments during a parliamentary audit of his ministry.

According to Yonhap News Agency, Choo stated that while the Israel-Hamas conflict had so far caused limited disruption to South Korea's economy and financial market, the situation could worsen, impacting inflation and global oil prices. This volatility could in turn influence South Korea's financial and foreign exchange markets and have a negative impact on its real economy.

The Finance Minister pledged that the government would continue to closely monitor the market and implement preemptive measures based on various scenarios. The comments come as inflation has generally slowed in South Korea, although consumer prices reported a five-month high on-year increase of 3.7 percent in September. Global oil prices have also fluctuated recently due to concerns about broader conflicts in the Middle East.

Also on Thursday, the Bank of Korea maintained its key interest rate at 3.5 percent, marking the sixth consecutive freeze since January 2023. The central bank cited high oil prices and global uncertainties as contributing factors that will likely slow down the rate at which inflation cools.

The government has extended the tax cut on fuel consumption to counter inflation and has plans to stabilize prices of agricultural products. In a bid to boost the economy, Choo announced plans to support exporters with 365 trillion won (US$268.89 billion) in trade financing this year, along with tax benefits for corporate investments. After a 12-month decline in exports, Choo expects an upturn starting in October, which could double South Korea's economic growth in the second half of the year.

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