A local think tank has projected that if export curbs on Russia are extended by the international community over its invasion of Ukraine, it could drag down South Korea’s annual growth by up to zero-point-06 percentage points. 

The Korea Institute for International Economic Policy(KIEP) said in an outlook released on Monday that a protraction of the foreign-produced direct product rule(FDPR) could lower the growth rate of Asia’s fourth largest economy by a range of zero-point-one percentage point to zero-point-six percentage points.

The KIEP said the maximum negative impact of Russia’s war on Ukraine on South Korea’s gross domestic product was calculated based on the assumption that China will join the U.S.-led regulation, while the minimum impact assumes China will not. 

While assessing its short-term impact will be insignificant, citing structures of bilateral trade and investment concerning South Korea and Russia, the agency warned of possible negative impacts, including rising financial uncertainties, raw material price hikes and supply network disruptions. 

A plausible exodus of foreign investors and hikes in the domestic interest rate were also cited as possible additional long-term risks as a result of inflationary pressure and austerity measures overseas.