Is it economic emergency time?
U.S. President Barack Obama returned to work in Washington assured of another four years in office after being re-elected. In Beijing, top officials assembled for the 18th Communist Party Congress intended to usher in a new generation of leadership for the next decade, presumably under Xi Jinping.
Uncertainty over the leadership of the world’s two largest economies has been cleared up. But a fog of instability and insecurity still shrouds the global economy.
The United States faces its so-called fiscal cliff, a series of laws that could lead to tax increases, spending cuts and other austerity measures worth $600 billion by the end of the year if Washington cannot come to an agreement on how to get the federal deficit under control.
The new Chinese leadership has the mighty challenge of rebalancing the industrial structure and stimulating domestic consumption to prevent the economy from a slowdown amid depressed overseas demand.
Our economy has plenty of worries with these external risks. The economy has been slowing fast, barely moving at a range of 0.2 percent to 0.9 percent on-quarter from January to September. Consumer spending and corporate investment fell, indicating an economy deeply stuck in a slowdown.
Because of synchronized monetary easing by the United States, Europe and Japan, the won has sharply appreciated against the U.S. dollar, putting a damper on our exports.
Still, our presidential candidates are competing to increase welfare spending, paying scant heed to ways to save the economy.
Actions to plug a hole in the sinking ship are imperative. Over the summer, Minister of Strategy and Finance Bahk Jae-wan said the government could look into a supplementary budget if the economy falls in the second consecutive quarter or if major economies were all take stimulating actions. We may not be at such a dangerous point yet, but we’re not that far away.
The economy cannot be expected to be buoyed by corporate and consumer activities alone. By clinging to a balanced budget, authorities could see the economy slump to a state beyond help. It may be time to consider emergency action.
President Lee Myung-bak used to say that there is no end to a government’s term when it comes to the economy and people’s well-being. He could spark controversy if he stimulates the economy with the presidential elections just a month ahead. But our economy has no time to lose.