SEOUL: South Korea's finance ministry said on Thursday it aims to pre-empt a downturn in the economy by diversifying export markets and unveiling new measures to boost demand for consumer goods.
In its policy direction for 2016 to deal with challenging external conditions, the finance ministry said it would expand cooperation with countries formerly under international sanctions, like Iran and Cuba.
The South Korean government has been contemplating measures to shore up the economy as exports, its traditional engine of growth, have weakened in recent years. In 2015, exports fell 8.0 percent, the worst performance since the depth of the global financial crisis in 2009.
South Korea's economic growth in the fourth quarter slowed by more than half from the third quarter of 2015 as weakness in construction investment and exports hurt activity.
"Our task this year is to mend exports, which is imperative to shoring up growth momentum," said Finance Minister Yoo Il-ho in opening remarks ahead of a government meeting to discuss policy priority.
Yoo said last week South Korea aims to double exports to Iran in two years, with construction and shipbuilding firms seen to benefit from the recent lifting of international sanctions.
In addition to Iran and Cuba, the government is also planning to establish a cooperative body with personnel from both the private and public sector to work with Asian countries like Malaysia, Cambodia and Thailand to increase trade.
The ministry statement said the government will announce new measures to boost exports of consumer goods like cosmetics, food products and apparel in March this year.
The government will also step up monitoring of foreign risk factors in the wake of uncertainty stemming from the Federal Reserve's pledge to keep raising U.S. borrowing costs.
As part of efforts to foster foreign exchange stability, the government will require banks to meet the current foreign exchange liquidity coverage ratio (LCR) before year-end.
The LCR, a Basel III regulation aimed at promoting banks' resilience of liquidity risk profiles, was implemented on a voluntary basis last year.
The government plans to make it compulsory, with expectations for LCR at 40 percent for this year and moving up 10 percentage points a year to 80 percent by 2019.
However, the LCR implementation process will be flexible and subject to change based on market conditions, the ministry said.
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