[EDITORIALS]How to Revive the Korean Economy

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[EDITORIALS]How to Revive the Korean Economy

Attempts are coming one after another to imbue economic confidence in the people. The Government Information Agency aired a television commercial claiming that the Korean economy will recover when Koreans have confidence, likening the economy to a half-filled glass of water. In a town-hall meeting, President Kim Dae-jung made a statement to the effect that belief in a strong economy is important. Deputy Prime Minister Jin Nyum emphasized that "psychological warfare" is of utmost importance, and government policy is moving in this direction. In principle, we agree with the government's interpretation and efforts. Especially when consumer psychology is more frozen than the objective economy, various efforts to defuse the nervousness of citizens and companies are called for.

Unfortunately, however, the economic reality facing Korea is too serious to be met with psychological confidence alone. Foreign exchange rates have soared almost 110 won to the dollar in a month, exerting serious pressures on prices and the foreign loan payments of companies and banks. Exports in March recorded negative growth for the first time in 23 months. Stock prices are sinking, while interest rates are surging. In addition, the economic situations of major markets, such as the United States and Japan, are getting much worse than expected, and there is no great idea to meet all these woes. Korea may lose all three rabbits ?growth, prices and trade surplus. Although the business survey index released by the Bank of Korea and the Federation of Korean Industries is on the side of improvement, many people point out that it does not indicate a fundamental recovery, but a temporary effect shored up by the additional infusion of public funds, the banks' quick purchases of corporate bonds and the enormous quantity of assistance poured into the Hyundai Group.

Yet the government merely reiterates the rosy argument, making the public more nervous. We recognize that a certain degree of optimism is necessary for the psychological stability of economic principals. However, the hasty announcement of recovery won't do. The government should understand that if it is preoccupied with short-term, external fixes to boost confidence, policy will be further distorted. Furthermore, Korea's investment and consumer psychology are in too dire a strait to turn around with just psychological warfare and government public relations efforts. Government officials must realize that no one would buy such a glossy picture.

The government has only one option: Based on a clear-eyed perception of reality, it should meet the crisis with principles and consistency. In an economic policy meeting presided over by Deputy Prime Minister Jin over the weekend, participants reportedly expressed their thoughts on such problems as a lack of principles and blueprints, stopgap measures, inter-ministerial confusion, policy formulated behind closed doors and irresponsible government officials. If they really did so, it is fortunate, albeit belated. However, self-reflections aren't enough. It is no exaggeration to say that we are now in the midst of an economic emergency. Korea is facing a delicate and difficult situation in which it cannot turn a blind eye to economic stimulation nor can it delay restructuring.

The government economic team should be united to set a direction and seek to build a consensus among public and business. Confidence should be recovered with principled, consistent promotion of policies. The president and politicians should realize the urgency of the situation and join in to revive the economy.
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