Is the Korean Economy Taking a Hit over Choi Soon-sil Gate?
SEJONG, Nov. 23 (Yonhap) -- South Korea's finance minister said Wednesday that the high-profile political scandal involving President Park Geun-hye has weighed heavily on the economy, which is already struggling with faltering exports and domestic demand.
President Park is at the center of the scandal involving her confidante, Choi Soon-sil, who reportedly meddled in state affairs including the appointments of government officials and allegedly pocketed large amounts of money through two foundations.
On Sunday, state investigators claimed that the president was connected to the wrongdoings conducted by Choi and presidential aides, who forced large business groups including Samsung and Hyundai Motor to give a large sum of money to establish the foundations.
As the scandal sprawls out rapidly, a political standoff between the ruling Saenuri Party and opposition parties also dealt a blow to the economic policymaking line in the government.
Financial Services Commission Chairman Yim Jong-yong has been named the next finance minister, replacing incumbent Yoo, but his appointment was rejected by opposition parties.
Critics are concerned that the virtual absence of the country's top policymakers makes it difficult for Asia's fourth-largest economy to deal with strong headwinds like the surprise victory of Donald Trump in the U.S. presidential election and a possible U.S. rate hike.
"Due to the domestic political situation, I am worried about the contracted sentiment of economic players," Finance Minister Yoo Il-ho said in a ministerial meeting in Seoul. "The South Korean economy has grown enough to reach its growth target of 2.8 percent for this year, but things have been stirring up uncertainties at home and abroad."
He said his current economic team will do its best to tide over the difficulties that the South Korean economy is now facing and to draw out the policy plan for next year as scheduled. The ministry is set to announce its 2017 economic plan next month.
South Korea's exports, the key economic driver, posted negative monthly growth 21 times over the past 22 months, while retail sales gained 0.5 percent on-year in September, slowing from a 6.1-percent growth the previous month.'