Japan's deadly earthquake will have a short-term impact on some of South Korea's manufacturers but its overall effect should be "limited" as long as the global economy continues to grow, a state think tank said Sunday.
"Some manufacturing companies in Korea are heavily dependent on Japan as a major supplier of intermediate goods, which could lead to difficulties in production," the Korea Development Institute said in a monthly report that analyzes the latest economic situations at home and abroad.
"However, the share of exports to Japan accounts for only 6 percent of Korea's total exports, meaning that as long as the global economic growth continues, the impact of Japan's earthquake on the overall Korean economy is expected to be limited," it added.
The report noted that the deadly earthquake and tsunami on March 11 caused a short-term contraction in Japan's economic activities but mid- and long-term impact of the natural disaster will be moderate.
The Japanese government's large-scale expenditure for reconstruction will help contracted economic activities rebound and the nation's excess production capacity could also help offset production losses, the report added.
With regard to the global economic situation, the report said that the recovery continues at a "moderate" pace as some advanced nations show improvement in employment conditions and emerging countries continue their economic growth.