The South Korean authorities are “carefully” watching the economic conditions despite improving data as escalating geopolitical risks following another missile provocation from North Korea aggravate uncertainties, said Yoo Il-ho, deputy prime minister for economy.

“We can hardly afford to loosen watch due to the North Korea risk on top of overseas uncertainties from trade barriers and interest rate increases in the United States,” Yoo told reporters after heading an economy-related cabinet meeting on Wednesday.

North Korea around 6.42 a.m. Wednesday fired a ballistic missile - its fourth launch so far this year - off its eastern coast that flew about 60 kilometers (37 miles) before plunging into the East Sea. Pyongyang is said to be in the final stage of carrying out sixth nuclear test.

Yoo said the government will judge whether it needs to create a supplementary budget after studying the economic conditions and data. The decision on additional fiscal spending, however, would be up to the next administration following the May 9 presidential election.

From data alone, the economy is recovering mostly on a boon in memory chips and refined oil products from rebound in international prices. Current-account surplus jumped 59 percent on exports growth of 23 percent in February. Inflation accelerated by 2.2 percent in March due to spike in petroleum-related prices.

“Conditions improved for recovery in business sentiment due to five-month growth in exports, but they are too fragile because of lingering uncertainties,” he said.

Yoo said the spike in February current-account surplus won’t likely influence much in the U.S. Treasury Department’s upcoming foreign exchange report on major trading partners. He claimed the conditions have not changed greatly to make Korea go on the list of currency manipulating states. The won has appreciated sharply against the U.S. dollar over the last two months. The dollar that was at 1,204.5 won on Jan. 9 slipped to 1,108.5 won on March 27. The dollar was up 1.30 won at 1,125.80 as of 1:45 p.m. Wednesday Seoul trading upon news of another missile launch from North Korea.

Yoo reiterated what financial authorities have been saying, warning that the government and state creditors would choose the option of placing Daewoo Shipbuilding & Marine Engineering Co. (DSME) under prearranged court restructuring if the shipbuilder cannot persuade private lenders to agree to the new government-led debt relief program.

By Cho Si-young

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]