[EDITORIALS]A warning on the economyPark Seung, head of the Bank of Korea, commented at a recent symposium sponsored by the National Assembly that he is worried about “whether the Korean economy is following in the footsteps of Japan’s stagnant economy that started in the 1990s.”
Although he did not express the view directly, Mr. Park took a step back from his previous stance that there is a slim chance that our economy will fall into a long-term recession as Japan’s did. What he said is a stern warning that our economic situation is serious.
Japan’s economy was in a slump for the past decade as the real estate market and stock market bubbles burst. Nevertheless, what is worrying for us is that signs of a prolonged bad economic outlook for our economy are due to damage to the economic growth engine.
The voices of interest groups, such as labor, become louder as their influence gets ever stronger, while restrictions and regulations on businesses are still the same, and division in our society is getting deeper.
Throughout its 10-year slump, Japan managed to maintain its competitiveness in the manufacturing sector, leaving a door open to revive its economy. The fact that we are losing economic vitality rapidly gives us concern that we might not be able to survive in case our economy plummets into a long-term depression.
The criticism delivered by Park Yong-seong, chairman of the Korea Chamber of Commerce and Industry, toward the politicians and the restrictive policies of the government at the meeting are in line with this bleak outlook. We all should take to heart the words of Mr. Park: “If labor disputes and restrictive regulations hindering companies are removed, companies will invest heavily without being asked to do so.”
In light of all the negative news on the economy, the only bright spot is that government officials have finally started to acknowledge the gravity of the problem. So far, the predicted crisis has not become a reality.
If we realize there is a crisis we can devise a plan to counter it, but we have to remember that if we do nothing the crisis won’t blow over by itself. Signs of a long economic downturn will not just go away as time goes by.
What the politicians and the government need to do first is to create conditions in which companies actively investigate and stimulate the economy so that jobs can be created.