[EDITORIALS]A wary economic forecastA warning has been issued on the prospects for the Korean economy: “There is a possibility that the Korean economy will slip into a double dip [recession].” That is, the economy will recover briefly after the second quarter, but it is likely to slump again in January. Recently, the talk of economic recovery has spread since Lee Hun-jai, deputy prime minister of economy and finance, and Park Seung, governor of the Bank of Korea, raised the prospect. But, considering the frozen consumer psychology and weak business investment, it seems premature to talk about an economic recovery.
Even if some indexes, including the factory operating rate, indicate a possible recovery, the details of the index show that there is nothing to be delighted about. First, the imbalance between exports and domestic consumption is too large. Thanks to export growth, Korean recorded 3.1 percent growth last year, but consumption and investment declined. Exports accounted for 98.2 percent of the growth; such a high dependence on exports is not desirable.
Moreover, as the employment effect of exports declines, job creation becomes difficult. The prospects for exports are not so bright. There apparently is a limit to growth based on exports.
Under such circumstances, if the government, based on export-related indexes, predicts that the economy will recover in full, it will be under an illusion and damage the economy as it did during the financial crisis in 1997. The “double dip” warning by the Samsung Economic Research Institute might stem from concern over such a situation.
The government should not be tempted by an opaque short-term recovery. It must make consumers open their purses and businessmen invest actively. When money circulates, and consumption and investment are at a healthy level, the growth potential of the economy will increase, balanced growth will be possible and jobs will be created.
The elections will be over soon. It does not matter which party wins. What matters is whether our economy will survive. For that, political unrest and uncertainty about the future should be ended. From now on, we must concentrate all our energy on the economy. Then the nation will survive.