[ECONOMIC WATCH]This Week's Economic AgendaDomestic and foreign economies are like the weather - totally unpredictable. Whenever a major economic index or policy is announced, it is greeted with conflicting gloomy and sunny outlooks. Views on when business will hit rock bottom and when it will take an upturn are still mixed, despite the fact that the year's second half begins in only six weeks.
What we should pay attention to this week in the foreign economies is of course whether the United States will slash key interest rates. This will be decided at the Federal Reserve's meeting scheduled for next Thursday. Wall Street is sure of an interest rate cut but is concerned with how aggressive the Fed's rate cut will be. According to Reuter's poll of 25 U.S. government bond dealers on Wall Street, all but one said they expected the Fed to cut rates by half a percentage point. The prospective rate cut by the United States is expected to have a favorable effect on the market. But it is unlikely that Wall Street will surge, if we consider that expectations of an interest rate cut have already been factored into share prices.
A report on the Japanese economy - one of the three leaders of the global economy - reiterated the prospect of a continuing slide in May for a fourth consecutive month. Accordingly, the rate cut's effect on real business is likely to be limited.
The Bank of Korea refused to implement an interest rate cut last week, but there are moves to decipher the real state of the Korean economy and to find a way out of the current difficulties. The much-maligned business community and political sphere, which have seen their influence diminished and reputations damaged, and have both been made targets of reform, are now making a vocal comeback.
The business sector, which has been calling for change increasingly loudly since last week, plans to openly recommend the relaxation of regulations - including the limitations on the 30 major business groups' cross-affiliate investment - through formal events such as Monday's meeting of the five major business association chiefs and next week's meeting of 30 major conglomerate restructuring heads. The government is refusing to give in easily to these demands, but support for them is spreading even in political circles. Accordingly, it is worth watching on which points the business sector and the government will compromise.
An overnight "camp" meeting of economic ministers and lawmakers from the ruling and opposition parties, set for this weekend, is also worthy of attention. It is said they will discuss all the issues afflicting the Korean economy. Let's hope they will at least get to the bottom of the Korean economy's problems.
Progress should also be made in the Hyundai Group problem this week. The negotiations between the South and North Korean governments and the Hyundai Group over the question of maintaining or abolishing the Mount Kumgang tourism business, which has turned from a reunification flagship project into a problematic cash-guzzler, are expected to make good progress. Let's also pay attention to the start of CEO Shim Hyun-young's reign at Hyundai Engineering & Construction next Friday.
-The writer is deputy industry news editor of the JoongAng Ilbo.
by Sohn Byoung-soo