Iran Oil Export Sanctions to Affect South Korea’s Economy, Minister Says
South Korean Vice Finance Minister Shin Je Yoon
SeongJoon Cho/Bloomberg
Shin Je Yoon, South Korea's vice finance minister.
Shin Je Yoon, South Korea's vice finance minister. Photographer: SeongJoon Cho/Bloomberg
Jan. 12 (Bloomberg) -- South Korean Vice Finance Minister Shin Je Yoon talks about the implications of increased sanctions on Iranian oil exports for the Asian nation's economy. U.S. Treasury Secretary Timothy F. Geithner visits Japan today, following talks in China yesterday, as he seeks Asian support for sanctions against Iran’s nuclear program. Shin also discusses the death of North Korea's Kim Jong Il, and South Korea's economy. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
South Korean Vice Finance Minister Shin Je Yoon
SeongJoon Cho/Bloomberg
Shin Je Yoon, South Korea's vice finance minister, said South Korea’s economy is “very sound” and while the elections could pose some risks to growth, the most significant factors are the possibility of a global recession and the strength of China’s economy.
Shin Je Yoon, South Korea's vice finance minister, said South Korea’s economy is “very sound” and while the elections could pose some risks to growth, the most significant factors are the possibility of a global recession and the strength of China’s economy. Photographer: SeongJoon Cho/Bloomberg
South Korea’s economy will probably be affected by increasing sanctions on Iranian oil exports and the country needs to diversify its oil suppliers, the country’s vice finance minister said today.
“We import 10 percent of the oil from Iran so it will be some impact,” Shin Je Yoon said in an interview with Bloomberg Television today.
U.S. Treasury Secretary Timothy F. Geithner is pressing Asian nations this week to cut Iranian oil imports with visits to China and Japan. Iran is South Korea’s fifth-largest supplier of crude and accounted for 9.4 percent of its total imports in 2011, the government said last week.
“I think 10 percent is not a small number,” Shin said. “It’s important to diversify the import destination.”
South Korea is working with counterparts abroad and “it’s too early to say” what the specific approach will be on Iran imports, he said.
The Bank of Korea forecasts that the country’s economic growth will slow to 3.7 percent in 2012 from 3.8 percent in 2011. Consumer prices rose 4.2 percent from a year earlier last month, exceeding the central bank’s 4 percent target.
Increased government spending ahead of parliamentary and national elections this year will make it harder for policy makers to cut rates to spur growth, according to Samsung Securities Co.
‘Very Sound’
South Korea’s economy is “very sound” and while the elections could pose some risks to growth, the most significant factors are the possibility of a global recession and the strength of China’s economy, Shin said.
South Korea’s Kospi Index increased 0.2 percent at 1:14 p.m. in Seoul, compared with The MSCI Asia Pacific Index (MXAP)’s 0.4 percent drop. The won was little changed.
Geithner yesterday held talks with Chinese leaders including Premier Wen Jiabao and Vice President Xi Jinping and met today with Japan’s Prime Minister Yoshihiko Noda and Finance Minister Jun Azumi.
South Korea will reinforce diplomatic efforts to minimize a reduction of crude purchases from Iran, and plans to look for alternative suppliers to secure a stable supply of oil, according to a joint statement from the finance, energy and other ministries on Jan. 5.
Expanded Sanctions
South Korea announced Dec. 16 that it will expand sanctions against Iran and cautioned companies against importing petrochemicals. Crude oil shipments aren’t affected by the Dec. 16 curbs on transactions with Iran.
The death of North Korean leader Kim Jong Il last month and the transfer of power to his son, Kim Jong Un, doesn’t pose a risk to South Korea’s growth unless there is a political upheaval, Shin said.
The most “probable scenario is that Kim Jong Un maintains the North Korean regime with the help of relatives and the existing people,” he said.
To contact the reporters on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net;
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net
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