Domestic and foreign experts on South Korea's economy expressed worry about possible financial crisis happening here amid rising concerns about potential financial distress of local companies, a central bank survey showed Monday.
According to the Bank of Korea (BOK) poll of 78 pundits on the country's economy and finance, 49 percent of the respondents forecast a low possibility of financial system risks becoming real within a year. It was higher than 15 percent predicting a high possibility of financial crisis. However, 40 percent of the respondents expected the financial system risks to be realized between 1 and 3 years from now, higher than a 19 percent response projecting a low possibility of financial crisis. The remaining 41 percent expected the financial crisis possibility to be moderate. The higher worry about the mid-term financial crisis came as corporate distress risks grew amid massive losses in fragile industries, especially shipping and shipbuilding industries.
South Korea is pushing a government-led restructuring process toward major shipping and shipbuilding companies, which have suffered from massive losses amid the global economic slowdown and the subsequent slump in revenue and orders. Fifty-nine percent of experts picked rising risks of corporate distress as one of the major potential risk factors faced by South Korea's financial system, almost doubling 32 percent tallied in the latest BOK poll in October last year.
During the survey, experts can select multiple answers. China's economic slowdown was picked by 73 percent of respondents, but it was lower than 90 percent in last October's survey. Those who selected household debts as the main risk factor declined from 62 percent to 54 percent.
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