[EDITORIALS]Not a pretty pictureConcerns are mounting at home and abroad over the uncertainties surrounding the Korean economy. Such worries are particularly deep overseas. Earlier this week, Bloomberg, a U.S. financial news agency, warned, "Investors are wondering if South Korea is sliding back into the kind of contentment it did in the late 1990s" before being hit by the 1997 Asian economic crisis. Although there is no reason why we should panic over a comment by a foreign news organization, it worries us that Korea gives such an impression to overseas observers.
Prices are rising, while domestic consumption is shrinking so much that wholesale and retail sales are decreasing for the first time in four years. Korea is also expected to suffer trade deficits due to surging oil prices. To make matters worse, the Business Survey Index, an indicator of local companies' business sentiment, fell to 80 in January, the lowest in two years. Firms are reluctant to make facility investments. Meanwhile, it is extremely difficult to predict when the global economic slump, another source of economic anxiety, will end.
Such negative conditions have prompted some experts to call for economic stimulus measures. But interest rate cuts would only backfire at a time when there is overflowing liquidity in the market. The government can do nothing more than execute its fiscal spending ahead of schedule. Therefore, it is important that the government focus on stabilizing the local economy by removing uncertainties, rather than resorting to hasty economy-boosting measures.
In this vein, President-elect Roh Moo-hyun should quickly announce his economic ministers because how his economic team is formed will indicate the new administration's economic policy. Doing so will reduce policy discord between his transition team and the current administration.
For now, the priority should be on quickly forming a new economic team so that businesses can carry out their economic activities without worrying about the future.