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On April 6 2010, Samsung Economic Research Institute had the honor of welcoming Portugal's Foreign Minister, Luis Amado, for a briefing on the Korean economy as well as the outlook for the global economy. Minister Amado was accompanied by the Ambassador of Portugal Henrique Borges, the director of the Asia and Oceania department Alfonso Henriques de Axeredo Matheiro, and Rita Laranjinha, advisor to the minister.
SERI's president Chung Ki-Young opened the meeting with welcoming remarks, followed by a presentation on the Korean economy by SERI senior vice president Lee Keon-Hyok and a presentation on the global economy by research fellow Kwak Soo- Jong.
The lively hour-long session closed with the minister's comments on the landscape of the post-crisis global economy, the current state of Portugal's economy and the future of ROK-Portugal relations. The following are excerpts from Minister Amado comments:Global Economy
"We are living in a totally different world. There are new challenges, and the relationship between the political, institutional and economic is determinant in the reconfiguration of global geo-politics in the 21st century."
"This crisis was the first crisis of globalization. It was also a result of the new dynamics in the global economy and its impact mainly on the financial sectors. And the problem now is how we can politically adapt to the new circumstances of the financial markets."
"We were all surprised by the dynamics of the past crisis because we lacked the institutional capacity to respond and politically we were in a completely new situation. But at the end of the two years, we recognize that we were able to avoid a global depression and we were able to do this because we learnt from the Great Depression..."
"I said to myself, we had the fall of the Berlin Wall and now we have the fall of Lehman Brothers"
"We reacted at a global level for the first time. And the G20, which South Korea is now a part of, was the result. Everybody realized that the G7 was not in a condition to respond to the crisis alone. The first positive reaction was that we reacted globally. And the second was that it was possible to limit the fall of the financial system. Lehman Brothers was a bad experience but the reaction was to avoid further collapse of the banking system. At the same time, we were able to avoid protectionism and we effectively used government stimulus packages."
"I was impressed by the capacity of coordination exhibited by all the leaders of the countries present. All the leaders at the political level had the capacity to coordinate their analysis of the situation and their response to the situation and this was very important. This was also important because we were able to put up an institutional framework."
"It is essential to multilateralize policies all over the world. In order to deal with global situations such as the previous crisis, we need to act in a more multilateralized institutional framework..."
"The geopolitical factions are very sensitive to the financing of the global markets. So, if you care about macroeconomic imbalances, you need to also consider the factors of tension at the geo-political level..."Portugal's Economy
"Portugal's problems are not the result of the crisis. Our problems are the result of structural problems that we still face, which were aggravated by the fact that we lost monetary autonomy 10 years ago. When we entered the Euro Zone, we lost the mechanism of devaluation and that is a very important instrument to change the conditions of competitiveness in the global economy."
"The growth of our economy has been very slow since the end of the 80's. We had problems of competitiveness, and the recent crisis aggravated the situation. We had to deal with increased deficits and debt. We had to use more public stimulus which created more debt and this aggravated the imbalances at a macroeconomic level and weighed down the competitiveness of our economy."
"We need to make serious reductions in our budget deficit for the next couple of years. And we are going to do some fine tuning because we have pressure from the EU. Because we cannot deal with certain limitations as we belong to the EU, we now have programs of stabilization and growth which were well received by the European institutions and the markets, so they are good programs. What we need now is to create a politically facilitating environment to achieve these programs and at the same time implement structural reforms of the labor market, educational system, and the aggregation of technological sectors to create conditions to recover the time lost to adapt structurally to the new economy emerging for the crisis. I think this could be a possibility if we can adapt to the future and free ourselves from the rigid limitations that we have in our society and our economy but this is a huge challenge that some economies in Southern Europe are facing."
"I think a full recovery will take 4 years at least. All aspects need to be developed at the same time which means we need to implement structural reforms at the same time. And the benefits from these reforms will come in the second half of this decade and in that respect it is very important to consider the trends of the future so that we can adapt to the economy, the new trends in the market and the industrial sectors."
"We are very much focused on green technology because we are too dependent on fossil energy. Green technology will be the most important contributor to our balance of payment. So, the reform of the energy sector is a very important structural reform. That is why we are backing the electric car. We will have Europe's first network of charging stations for the electric car throughout the country. It will start this year and these stations will supply both petrol and electricity."
"We are trying to recover at this level but I believe that seen from the outside, how we can sustain our position in the Euro Zone is a complicated problem but in the end we have the adequate conditions."
"I really believe that this is an opportunity to make structural adjustments to adapt to a very demanding and disciplined network that comes from belonging to a stronger currency. We have the will and the capacity to achieve this but we need to create the internal political conditions. If we can, we will be in a better position than we are in now in ten years, so thank you for the opportunity to meet with you."ROK-Portugal Relations
"Korea is very strong now and I want to thank you because we are very interested. I am personally very much engaged in the development of the relationship with South Korea. I think you are a very good example on how you can manage yourselves in the global economy and achieve such strong results. Being a member of the G20 gives you a new responsibility and relationship with the world. The interdependency is so intense nowadays, and running the global economy means you are running the world. Korea can play an important role in reaching other countries. You are open to different civilizations and you are at the core of the Asian economy."
"We can be mutually beneficial. Portugal can reach certain countries like Brazil, South America and Africa, because we have strong relations there and we are preparing a good base for the future. I think we have a lot of learning to do and we can be useful to you in regards to the role you need to play in the global system."
"You didn't have the international bank or the European commission but you did a wonderful job in the past decade, very impressive. South Korea should be a case study for all of us because we need the same discipline effect that your society and your economy experienced because we are in a similar situation."