Lee Chang-yong, Governor of the Bank of Korea, "No Revision of Growth Path Even During Previous Impeachment Situations" [Kang Jin-kyu's BOK Watch]

"Only Short-term Shock During Roh and Park's Impeachment"

"Separation of Political and Economic Issues"

"Martial Law Declaration Causes Major Shock Abroad"

"Inquiries So Numerous It's Hard to Respond"

Lee Chang-yong, Governor of the Bank of Korea, stated on the 5th, "The current martial law situation is not at a stage where we need to change our growth path outlook." He anticipated that the martial law would be resolved shortly and that the economic impact of the upcoming impeachment situation would not be significant.

Governor Lee made these remarks in response to questions from the press at the Bank of Korea's annex in Namdaemun-ro, Seoul, this morning. He explained, "The martial law situation did not affect the growth paths of 2.2% this year and 1.9% next year, as discussed in the last monetary policy direction meeting," and added, "There is no need to change the outlook path at this moment due to the lack of new information." He further noted, "The economic policies of the new U.S. administration, export momentum, and relations with competing countries are more important."

Governor Lee believes that even if the situation transitions to an impeachment phase after the lifting of martial law, the long-term impact will not be significant. Data from the impeachment situations of former Presidents Roh Moo-hyun and Park Geun-hye show that while there was a short-term market shock, the long-term impact on growth rates was limited. He stated, "Although uncertainty is high, political and economic processes can be separated even if the situation prolongs."

Regarding market conditions, he observed that negative issues have caused exchange rates to rise and affected stock prices. Although exchange rates plummeted after the lifting of martial law, they remain higher than before the martial law, and Governor Lee expects them to "gradually decrease over time." He predicted, "With sufficient stabilization measures such as liquidity supply through F4 meetings, things will return to normal unless there are new shocks."

Governor Lee also mentioned that "the shock abroad is significant" regarding the martial law situation. He is known to frequently discuss economic conditions with figures such as former U.S. Treasury Secretary Lawrence Summers, European Central Bank President Christine Lagarde, and former IMF Chief Economist Olivier Blanchard.

He said, "It's difficult to talk about specific individuals, but domestically, people have been observing the political situation and could guess why this happened, whereas abroad, it was completely unexpected," adding, "I've been clarifying misunderstandings as I've received so many messages and emails that it's hard to respond."

Despite this interest, he does not see a situation where the country's creditworthiness is at risk. Governor Lee stated, "The political issue is completely separate from the economic fundamentals," and "there will not be a significant impact on creditworthiness." He even noted, "The martial law was lifted without major conflict in just six hours according to the rules set by law," and "it became an opportunity to demonstrate the maturity of Korea's democracy."

Reporter Kang Jin-kyu josep@hankyung.com