After much anticipation, South Korea informed that it had prepared a 17.3 trillion won ($15.4 billion) extra budget aimed at spurring its recently fragile economy. Indeed, the Asia’s fourth economy has lately witnessed a slowdown in its economy due to the weakness of yen and escalating North Korean threats. All recent initiatives of the South Korean government are designed to boost the country’s economy and support its exporters.
Surprisingly, the Bank of Korea did not decide to cut rates as it was widely expected. Neither the mounting political pressure nor increasing North Korean threats were enough to push the central bank of South Korea to change interest rates.
North Korean threats have not only spread panic because of the political implications of probable military confrontation, but they have also already affected markets. South Korean officials underlined that the irrational political situation driven by the North Korean threats and rampage would have immense and long-lasting impact on markets. Indeed, the North Korea’s recent policy of aggressive steps might pose a threat to stability of the South Korea’s economy. Yet, South Korean officials have been instantly ensuring that they will take all required steps to stabilize the financial market.