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S. Korea welcomes Greek bailout deal

July 13, 2015
Greek Prime Minister Alexis Tsipras speaks with the media after a meeting of eurozone heads of state at the EU Council building in Brussels on Monday, July 13, 2015. A summit of eurozone leaders reached a tentative agreement with Greece on Monday for a bailout program that includes "serious reforms" and aid, removing an immediate threat that Greece could collapse financially and leave the euro. (AP Photo/Geert Vanden Wijngaert)

Greek Prime Minister Alexis Tsipras speaks with the media after a meeting of eurozone heads of state at the EU Council building in Brussels on Monday, July 13, 2015. A summit of eurozone leaders reached a tentative agreement with Greece on Monday for a bailout program that includes “serious reforms” and aid, removing an immediate threat that Greece could collapse financially and leave the euro. (AP Photo/Geert Vanden Wijngaert)

SEJONG, July 13 (Yonhap) — South Korea on Monday welcomed the unanimous agreement reached by eurozone leaders on a Greek bailout, but stressed the need to maintain its vigilance.

The 19-member eurozone agreed Monday after marathon negotiations to provide Greece with bailout funds in exchange for Athens accepting the tough reform measures demanded by creditors. Measures that the country must take include pension fund reforms and tax hikes.

“The agreement is a welcome development since it alleviates festering market uncertainties to some extent,” a finance ministry official said.

The official, however, said it is too early for South Korea to let down its guard since the Greek debt problem encompasses not only economic matters, but also social and political considerations.

“The deal must be approved by various European parliaments,” said the official, who wanted to remain anonymous. “Seoul is keeping careful watch on the foreign exchange and other financial markets to see how they react to the understanding reached.”

Local market watchers said the Greek agreement will benefit South Korea by easing external unpredictability that can weigh down the economy.

Most government officials and economists have claimed that even if Greece left the eurozone and defaulted on its debt obligations, the impact on South Korea would be limited.

On the other hand, many concurred that the Greece issue could cause short-term shock in the international financial market, which cannot be good for Asia’s fourth-largest economy.

Because of such worries, the government has said that it has set up a contingency plan to control any fallout.

Lee Jun-hyup, a researcher at Hyundai Research Institute, said the agreement is a positive development, although South Korea’s exports may be affected to some extent.

“Because the value of the euro took a hit during the negotiation process, South Korean shipments to the European Union may decline by some 1-2 percent,” he said.

On the other hand, some observers said there is no real guarantee that Athens will be able to deal with its massive debt problem, even with bailout funds and more austerity.

They speculated that if the country cannot cope with its debt problem, a crisis will balloon again in 2-3 years.

Even if the Greek issue is resolved, troubles facing China remain, requiring close monitoring by authorities, according to the observers.

China, South Korea’s largest export market, recently experienced a stock market crash amid worries that its economy may slow down this year. The International Monetary Fund said last week that the Chinese economy may grow 6.8 percent in 2015, down from 7.4 percent in 2014.