Korea needs to stay vigilant against any developments next year as its economy is expected to face many “destabilizing factors” that could weigh on its recovery and growth, the nation’s top economic policymaker said Wednesday.

“Economic conditions at home and abroad are expected to be tough next year at a time when the eurozone fiscal debt crisis, major elections and North Korea variables remain in place as destabilizing factors,” Finance Minister Bahk Jae-wan said during a crisis management meeting with other officials.

“We should not let our guard down and must carefully respond (to any developments) by leaving all possibilities open,” he said.

Bahk noted that the nation’s financial markets have been stabilizing from the shock prompted by the sudden death of North Korean leader Kim Jong-il but added that it is still too early to stay complacent.

“Fortunately, financial markets are stabilizing and the impact (of Kim’s death) on the real economy has been subdued so far,” Bahk said.

“But it is early to predict what will play out and the government should make efforts to minimize any ramifications by keeping its eye on major economic trends,” he added.

Bahk, meanwhile, assessed 2011 as a year of “marked uncertainty and volatility,” referring to cloudy economic conditions punctuated by the eurozone debt problems, the deadly earthquake in Japan and the recent death of North Korean leader Kim.

He cited stubbornly high inflation and rising housing prices among other things, saying that they all ended up increasing the burden on many low and middle income earners throughout this year.

The minister still pointed to some encouraging news, referring to the nation’s trade volume that exceeded $1 trillion for the first time and rating agencies’ affirmation and outlook upgrade on South Korea, which he said proved its strong economic fundamentals. 

(Yonhap News)