A perfect storm is coming

“The inaction of the government is scarier than a market crash,” wrote a blogger, grieving the lackadaisical response from authorities as the Korean stock markets retreat at a raging pace. The comment underscores the disgruntlement and outrage against the government’s casual approach to the rapidly sinking economy, catastrophic job conditions and lethargy across the industry. There is little sign of urgency from the government to address the daunting challenges.

Financial authorities held a meeting on Monday with institutional players and vowed to inject 500 billion won ($438 million) into the economy to stabilize the shaky stock market. But the measures only encouraged foreign investors to dump their holdings and individual investors to follow suit. The main Kospi lost the 2,000 mark for the first time since Dec. 7, 2016. The Kosdaq plunged 5 percent against the previous session.

Instead of continuing to be laid-back, they must seriously contemplate and draw up a roadmap to radically change our economy’s fundamentals. It must first ask why the local bourse undergoes such a tantrum at every external hiccup. The Bank of Korea downgraded this year’s growth estimate to 2.7 percent, but that may also be hard to achieve. The central bank can hardly put off a rate hike any longer, but whether it can deliver one in November remains questionable given the fragility of current conditions.

Exports also look shaky. Automakers big and small have taken a hit from the trade friction between the United States and China, their largest two markets. Semiconductors could be peaking. But there are no industrial policies that can address current and future challenges. Despite fears about a looming perfect storm, the Blue House and government trot out recycled or makeshift actions to create part-time jobs without lifting regulations to pave the way for new industries and lasting jobs.

President Moon Jae-in did not mention the dire economic situation during the latest secretariat meeting. During his hike with the Blue House press corps over the weekend, he only defended existing policies. In his parliamentary address due on Thursday, he is expected to stress on inter-Korean projects without any new economic initiatives. Many are complaining that the presidential office is neglecting the economy because it is too engrossed in inter-Korean affairs. Even as Korea Inc. is undergoing turmoil, there is no captain to be seen.

JoongAng Ilbo, Oct. 30, Page 30