The South Korean government said Sunday it plans to closely monitor the impact of Japan's record-breaking earthquake on the local economy and take actions to minimize potential negative impact if necessary.

Earlier in the day, Finance Minister Yoon Jeung-hyun presided over an emergency economic policy coordination meeting, attended by chiefs from 16 government agencies, in a bid to assess the impact of Japan's powerful quake on the Korean economy and local industries.   

"For now, Japan's quake is expected to have limited impact on the Korean economy, but uncertainties are high," Yoon said.

The finance minister said that considering Japan's status as the world's third-largest economy and Seoul's No. 2 trade partner, the situation requires closer monitoring.

"As higher oil prices are increasing economic uncertainties and Japan is grappling with the impact of the quake, we need to consistently keep an eye on developments. If necessary, we need to be proactive to minimize negative impact of the disaster on the Korean economy."

His remarks came after Japan was devastated on Friday by a massive earthquake, the worst on record, which is estimated to have killed more than 1,000 people.

The finance ministry plans to examine how Japan's massive quake will affect the global economy and financial markets, and the trade ministry will check the supply and demand of components, which are largely imported from Japan. The government will also monitor the risk of radiation leaks from nuclear power plants at quake-hit areas in Japan.

The quake is expected to impact Korea's imports of components from Japan, which account for about 25 percent out of total component imports, according to the Korea Trade-Investment Promotion Agency (KOTRA).

Last year, South Korea imported components worth US$38.1 billion from the neighboring country. The quake is likely to heavily influence components used for electronic goods and petrochemical products, it said.

The Financial Services Commission, the financial watchdog, said Japan's disaster is expected to have a limited effect on local financial markets, but vowed to keep tabs on the situation.

"Japan's quake could weaken sentiment, but its impact on the financial markets is likely to be short-lived and limited," said Kwon Hyouk-se, vice chairman of the FSC.

"But Japan's quake has a chance of aggravating volatility in the market when combined with risks stemming from recent political turmoil in the Middle East and North Africa and global inflation.

The watchdog plans to closely monitor the financial markets and foreigners' capital flows."

South Korea's central bank said on Saturday it will continue to closely monitor financial markets and take measures to stabilize the markets after consulting with the government if necessary.

"The global financial markets are seen as being cushioned well from shocks of the quake," Vice Finance Minister Yim Jong-yong said.   

Experts said the impacts of Japan's quake on the local economy are expected to be different industry by industry.

As production of autos and operations of petrochemical facilities in Japan have been halted, in the short term, South Korea's exports could benefit, they said.

"Production of cars and petrochemical goods may be suspended at least for a month, and there is a chance that production of semiconductors could be in trouble there," said Kim Yang-hee, a senior economist at the Korea Institute for International Economic Policy.

Kim said Korean products that are competitive with those of Japan in global markets could enjoy benefits in the short term.

The government said main local industries, including car makers and shipbuilders, have secured sufficient stocks for components, but if production suspension in Japan is prolonged, it is feared to have impacts on some Korean industries. The government said it plans to support switching import channels if necessary.

"When it comes to impacts of Japan's quake, there is the need to focus on financial markets rather than the real economy," said an official at the finance ministry. "It is not likely that the local currency is facing high volatility, but the government is keeping a tab on financial markets around the clock."