Markets across the world are feeling the effects
of the recent drop in oil prices. Here in Korea, the finance minister says…
the economy could end up benefiting. But others are raising concerns of deflation,…
and financial firms at home and abroad… have downgraded their inflation rate forecasts
for this year. Shin Se-min reports.
There are concerns that spiraling global oil prices could push Korea′s annual inflation
rate down this year to its lowest level in 16 years, into the zero percent range.
If that happens,… it would mark the first time since 1999, right after the Asian financial
crisis, when consumer price growth dipped to 0-point-8 percent.
The possibility is being raised by analysis from financial firms at home and abroad.
Samsung Securities and the Korean Development Institute that have downgraded their forecasts
to below one percent. Overseas, Credit Suisse lowered its projection
from nearly 3 percent to 0-point-9 percent,… citing sinking crude prices.
Analyst worry that the falling oil prices added onto the Korea′s sluggish economic
growth may lead to something else. “Stabilized supply prices on the back of falling
oil prices… have created a foundation for lower prices. That and the nation′s stagnant
economy together will spur a decline in consumer sentiment,… raise concerns about low inflation,
and even of a lower economic growth rate.” The nation′s inflation rate has remained
in the one percent range since November 2012 after hovering in the 4 percent range in 2011.
The slide in oil prices has some going so far as to raise the prospects of deflation
in Korea. However, Finance Minister Choi Kyung-hwan
dismissed those concerns on Wednesday. Instead, he said lower oil prices could end
up benefiting Korea,… as a drop in import prices would help boost domestic demand.
Shin Se-min, Arirang News.