Analysis

South Korea Will Recover Quickly from North’s Economic Warfare
A woman walks by a screen showing the Korea Composite Stock Price Index (KOSPI) at the Korea Exchange in Seoul, South Korea on March 22, 2013. (AP Photo/Lee Jin-man)
April 11, 2013
| Security, Economics
| Asia and the Pacific
Summary
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The stream of rhetoric from North Korea over the last few weeks has been mainly focused on military aggression, but there has also been an economic dimension and the drumbeat of threats has hurt South Korean financial markets. The effect, however, is likely only temporary, while even a small military conflict would have significant and lasting economic consequences for South Korea.
LIGNET believes that Kim Jong Un is attempting to wage economic warfare against the South, but that the South's economy is strong enough to prevent serious damage. Many automotive, electronic, and industrial firms in South Korea are global leaders with strong earnings and are resilient enough to overcome bad news days. LIGNET judges that the South Korean economy, due to its low interest rates, tame inflation, and minimal unemployment figures, will finish 2013 strongly and that its stock prices will begin rebounding by this autumn.
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