[EDITORIALS]The Silver Lining Has a CloudThe growth of gross domestic product in the third quarter was 1.8 percent. The figure is far higher than the projections by major economic institutes of below 1 percent. Because the U.S. and Japanese economies are contracting and competitors such as Taiwan and Singapore are also contracting economically, the world is eyeing Korea's unexpected economic growth.
Domestic and overseas economic conditions look less pessimistic. Led by the recovery of the U.S. stock markets, restoring prices to the level before the terrorist attacks, major global stock markets are buoyant. Oil producing countries failed to reach an agreement to reduce output, and international oil prices plummeted more than 30 percent, a situation favorable for oil importers like Korea. Skyrocketing semiconductor prices are more good news for the Korean economy. Amid the improving conditions, some government officials say they believe that the economy hit bottom in the third quarter and a recovery will come in the first half of next year.
It is too early to be so optimistic. Let's look more closely at the GDP figures. Production and exports were slow, but construction and consumption expansion boosted GDP. Analysts said the government spent a large sums to build school rooms, which accounted for half of the third quarter economic growth. Tax money is propping up the economy.
Capital investment and exports, the engines of growth, show no sign of recovery. Capital investment contracted by 15.4 percent and exports by 5.5 percent in the third quarter. Large companies plan to reduce their investments even further next year. The Organization for Economic Cooperation and Development forecast that the the U.S. and Japanese economies, Korea's largest export markets, would be sluggish next year. Restructuring of Hynix and public companies has not been completed. Many economists warn against hasty optimism because of those uncertainties.
Rash optimism is as poisonous as hopeless pessimism. The Korean economy is easily heated up and cooled off, driven by hasty optimism. This is no time for the government, companies and households to relax.