[EDITORIALS]A rudderless economyThe indicators show that the domestic economy is deteriorating. Domestic consumption has sunk to a 53-month low. Corporate capital spending is down again. Despite the interest rate cut by the Bank of Korea, investment and consumption are shrinking. Adverse factors such as the SK Global accounting scandal and the problems of bonds backed by credit-card debt cast shadows on the economic outlook. Summar-izing the current conditions, Park Seung, governor of the central bank, said, “The economy is going into a more critical condition.”
How can the Korean economy find its way out of difficulty? The current critical condition is not an economic problem only. Noneconomic factors, such as North Korea’s nuclear weapons program and SARS, affect the domestic economy. As the government handles critical issues without strength or principle, unrest in the state administration and flagging public trust follow. As a result, economic activities shrink further.
Ministers issue conflicting pronouncements, and the Blue House undercuts the finance minister. Political considerations repeatedly take priority over principle. It is even doubtful that there exists any center of the government’s economic team. The confusion in the handling of the truckers’ strike and the conflict over the National Education Information System reminds us of a state of anarchy. Harsh conflict in the political world is making the public uneasy, quite apart from the economic issues. In a word, the economic situation cannot be solved merely with an interest rate cut or other monetary policy. The government has failed to grasp the real reasons for the current economic deterioration.
Since the reasons are complex, the solutions also must be complex. First, the government should recover its leadership and restore public confidence. It should show consistency, with the economic team in the center. Then it should seek ways that 280 trillion won ($233 billion) of floating money can be invested, so that measures to boost the economy are effective. President Roh Moo-hyun recently said, “It is time to focus on the economy.” Actions, not words, are needed.