Sound Economy Rests on 3 Pillars

The nation will witness a variety of events for the Month of Science in April. Some 250 organizations for science and technology and local autonomous governments will host about 600 events, providing families with a good opportunity for productive outings.

As for the week ahead in the Korean economy, let's start with a look at last week's developments. Saturday's meeting of President Kim Dae-jung and his top economic policymakers was the first such gathering since his sweeping cabinet shake-up on March 29. At the meeting, ministers stressed a stable management of macroeconomic indices such as prices, the won-dollar exchange rate and interest rates, which they called the three pillars of the economy.

They said that the government would unveil a comprehensive package of measures in June, after checking business indices for the five months until May. Thus the government is expected to look for the direction to which it will steer the economy for the time being, fine-tuning policies that have been mapped out so far.

What draws our attention in particular are, of course, the declining value of the won against the U.S. dollar and the rising unemployment.

Last week, the government dipped into its foreign-exchange coffers to prop up the plummeting won for the first time since the 1997 currency crisis. That reflected the government's strong commitment to keeping a rein on the won's slide tied to the weak Japanese yen.

We should pay attention to what the Chinese government will do about the yuan in the event that the Japanese currency continues to plunge. For Beijing's foreign-exchange policy directly affects Korea's export markets.

The government initially forecast this year's economic growth at 5 percent and the unemployment rate at 3 percent. It has adjusted the estimates to 4 percent for both categories. The number of jobless people now hovers around a million but is likely to go up. So policymakers said at the meeting with the president that they will draw up measures to create 200,000 jobs for college graduates.

Local equity markets are expected to remain generally bearish, affected by the U.S. stock market that is taking beatings from corporate profit warnings, U.S.-China tensions and heightening recession worries. The domestic stock markets turned higher late last week on a temporary rebound in the Nasdaq. Considering that Wall Street plunged back on weekend, Monday's market will likely become a barometer for the week.

There is also good news. Exports are showing signs of recovery. Shipment of automobiles to the U.S. is on the rise, and the semiconductor market may pick up. Exports by the information-technology sector are also increasing.

In the international arena, easing U.S.-China tensions and Japan's announcement of measures to boost its stagnant economy are expected to add some stability to the global economy.

It would be doubly helpful to Korea's economy if the National Assembly's extraordinary session Monday provides a venue for discussing economic policies, rather than political mud-slinging.

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We should watch what China will do about the yuan.

by Kim Tae-jin