[EDITORIALS]Act Resolutely on Export ErosionThe situation for Korea's exports is more dire than first thought. Recording negative growth for each month from March through June, Korea posted a 13.4 percent decrease in exports last month, the largest drop since February 1999. Slow recovery in the economies of the United States and Japan is predicted, which could mean negative export growth. The current account surplus may look comforting, but it is actually the result of sinking imports, which have fallen more than imports, led by lower facility investments. This "scaled down" balance is not a positive factor for the long-term competitiveness for our industries.
Korea relies heavily on exports, which accounted for as much as 53.3 percent of gross domestic product last year. Therefore, without a recovery in exports, we can not expect a genuine pick-up in the overall economy. Domestic demand and consumer confidence have shown signs of recovery, but they can have only limited impact. In the economic policies for the second half of the year, publicized on Monday, the government lowered its prediction on economic growth to between 4 to 5 percent from 5 to 6 percent. It added that if improvement in the U.S. economy is delayed further, the growth rate could drop to the four percent level. The Bank of Korea cut its outlook from 5.3 percent to 3.8 percent.
We need to come up with fundamental and long-term measures that can invigorate exports. First of all, the government must address short-term issues, such as financial support for exporters and eliminating unnecessary regulations. Korea is chased by China and checked by the United States in exports. The government and private industry should give serious thought to opening an escape route for Korea's export industries and diversify exports, which are overly concentrated on one to two products, such as semiconductor chips. The government should realize this is a far more important and critical issue than a short-term economic boost. Other tasks are the promotion of research and development and capital investments by companies that have decelerated during the economic slowdown and restructuring and the attraction of foreign investors by enhancing the business environment.