DPRK risks to have limited impact on S.Korean economy

Risks related to recent threats by the Democratic People's Republic of Korea (DPRK) will have a limited impact on the South Korean economy, the Finance Ministry said Wednesday. "The recent series of North Korea (DPRK)'s provocative threats are seen to have a limited impact on our real economy,"the Ministry of Strategy and Finance said in an e-mailed statement." From the perspective of fiscal and monetary policies, our response capability is enough to vitalize the real economy."

The ministry cautioned that there remained a possibility for geopolitical risks to expand on the Korean Peninsula and have a negative effect on the real economy, saying that it will closely watch the developments related to the DPRK.

Concerns emerged over the possible foreign fund exodus amid mounting tensions on the peninsula. Around 4.2 trillion won (about 3.7 billion U.S. dollars) flowed out of the local stock market in 2013, but the ministry said it was in the correction period after 18 trillion won in foreign capital flowed into the market in 2012.

The ministry also noted that the geopolitical risks have no great chance to downgrade South Korea's sovereign credit rating. Moody's said in an April 2 report that"Pyongyang's bellicose rhetoric highlights geopolitical risks, but does not undermine South Korea's credit fundamentals."

Tensions have been running high on the Korean Peninsula after the DPRK conducted its third nuclear test on Feb. 12 in a protest against the joint military drills between Seoul and Washington.

The DPRK said it would restart operations at its Yongbyon nuclear complex, including a uranium enrichment plant and a five- megawatt graphite moderated reactor that had been "mothballed and disabled" since October 2007 under an agreement reached at the six-party talks.

South Korean Defense Minister Kim Kwan-jin told lawmakers last week that the DPRK moved intermediate-range missiles to its east coast. The missiles were feared to be fired off before April 15 when Pyongyang celebrates the birthday of Kim Il-sung, the founder of the DPRK and the late grandfather of Kim Jun-un.