[EDITORIALS]Stimulus could be riskyNowadays it is easy to find people who are distressed by what they call the worst economic slowdown in Korea’s history. Economic hardships are well documented in the taxi business, a barometer of economic sentiment. Cab companies said that only one-fourth of taxi drivers meet their daily “boundary,” the amount they have to pay the company to rent the cab they drive. Taxi drivers complain that this is the worst economic depression they have ever experienced. The slow business at restaurants, hotels and retail and wholesale businesses is serious.
The National Statistical Office reported yesterday that the monthly service industry activity index, gauging the nation’s service industry output, declined for the first time in eight months in January. The size of the year-on-year decline was the largest since the agency revised the index in 2000. Sales at wholesale and retail businesses dropped by 0.9 percent in January, a decline for the 11th straight month. Restaurants, bakeries and bars saw their sales drop in January by nearly 14 percent. Sales of automobiles dropped by 29 percent. Sales at hotels increased by 3.3 percent, thanks to good business at hotels and condominiums during the winter holidays, but inns are said to be suffering.
The problem is that business sentiment is deteriorating this year despite reports from government agencies that the economy already hit bottom.
The government’s difficulty in finding an appropriate solution is understandable. “Recently, several economic indexes demonstrated a rebound in business sentiment and employment in the manufacturing sector and an improvement in private consumption,” the Korea Develop-ment Institute said in a report on the economy in February. If the institute judged correctly, government intervention to stimulate the rebounding economy could result in overheating. Also, the government cannot shake off criticism that it is trying to boost the economy ahead of the legislative elections.
As the cries of hardship burst out from here and there, however, the government should analyze the current situation accurately. And it must stimulate the economy, if necessary, even at the risk of politically biased criticism. It is urgent for the government to make that judgment.