SEOUL, May 18 (Yonhap) -- The impact of oil prices on South Korea's economy has been growing over the past decade, a think tank said Wednesday, calling for more efforts to reduce the nation's dependency on fossil energy for economic growth.
A 10-percent hike in crude oil prices would lead to a 0.6 percentage point decline in purchasing power from the nation's gross domestic product in 2010, up from a 0.3 percentage point fall estimated in the 1990s, according to the state-run Korea Development Institute.
The contraction is much higher than other major economies such as France, Japan and China, which posted corresponding figures of about 0.2 percentage point contractions, the KDI said.
"The negative impact of energy price hikes on the national economy seems to be increasing and the extent is also significantly high compared with other countries," said Kim Dong-seok, an economist who authored the report. "That is because our dependence on oil has significantly increased."
The report comes as rising crude oil prices are feared to undercut South Korea's economic recovery by dampening consumption and driving up the overall production costs. South Korea is the world's fifth-largest oil importer and depends heavily on imports for almost all of its energy needs.
Seoul is currently pushing to reduce its reliance on oil under the so-called green growth campaign by increasing the use of environmentally-friendly and other alternative energy sources.
The report lent support for the government's current energy policies aimed at expanding the ratio of renewable energy and nuclear power in the nation's energy consumption. It also stressed that the government needs to use the current sky-high oil prices as an opportunity to boost the nation's overall energy efficiency.
