Turning to the economy

Politicians finally turned their attention to the economy. The ruling Saenuri Party, in a meeting with the government, agreed to outline a supplementary budget by February. The main opposition Minjoo Party said it approved of the idea, given the deterioration of the economy and worsening conditions. Supplementary budgeting usually is created when the country faces an emergency such as natural disaster.

The economy indeed is in an emergency state, facing a perfect storm on both external and domestic fronts.

Spending and growth has stagnated as the economy is expected to miss its 3 percent target for the third consecutive year in 2017. There is no Christmas or year-end festive mood on the streets. The troubled manufacturing field is shedding jobs and banks, considered the safest jobs in the private sector, also have been encouraging employees to take early retirements. The dollar has jumped on the latest data suggesting a faster-than-expected recovery in the U.S. economy, fueling expectations for accelerated tightening in the United States after a recent raise in interest rates by the Federal Reserve. Bond yields are on up, pressuring lending rates to rise. Grocery prices have jumped and eggs have become scarce due to an outbreak of bird flu.

All the circumstances justify an additional increase in fiscal spending. Next year’s budget is the largest-ever, at 400.7 trillion won ($341 billion), but nevertheless up a mere 0.5 percent against this year’s spending when considering the supplementary budget in the second half. Most international organizations advise Seoul to spend more to jump-start the economy, as the Korean central bank is in a policy bind and cannot bring down the interest rate further to aid the economy after the U.S. counterpart began raising its benchmark.

The National Assembly should make sure the extra spending is appropriated well to maximize efficacy. Lawmakers must not use the money to gain favor from voters in their constituencies. The extra spending should entirely go to making jobs for young people and retooling the industry. Every dime comes from the pockets of the people whose livelihood is getting tougher and tougher.

JoongAng Ilbo, Dec. 24, Page 30.