SEOUL, Nov 20 (Reuters) - South Korea is experiencing disinflation due mainly to low commodities prices and there is no risk of it falling into a Japan-style deflation, a senior official at credit rating agency Moody’s said on Thursday.
“I would say it’s a disinflation process but not a deflation process,” Tom Byrne, a senior vice president at Moody’s Investors Service, told Reuters on the sidelines of a conference in Seoul.
“I don’t see the risks of Korea going into a long period of deflation as Japan did as economic preconditions are just fairly different,” he added, referring to still low unemployment, growing employment and rising wages in South Korea.
He added that the government’s attempts to encourage companies to pay more dividends and hire more people would not be hugely successful because its plans to penalise those failing to do so were temporary and as any penalty would likely be small. (Reporting by Choonsik Yoo; Editing by Edmund Klamann)