[EDITORIALS]Predictions or propaganda?

Park Seung, governor of the Bank of Korea, indicated a possibility that the central bank would raise the call rate next month. He said, “If next month’s economic indicators show the same trend as is expected now, [the call rate] will be increased.” As grounds for that conclusion, he pointed out that various economic indices show signs of recovery. It is true that major economic indices such as production, consumption and investment show improvements, but modest ones.
The consumer price index, another economic indicator, is declining further recently. Although figures related to the real economy are improving, consumers are still caught up in psychological uneasiness. In practice, the economy felt by the people is still sluggish, regardless of the statistics. This is because there is a limit to how much economic indices reflect the real economy, and because the basic figures of the economy still stagger under recession, although they have improved a bit compared to the nadir recorded last year. It is an optical illusion to decide that the economy is recovering by comparing this year’s growth rate with that of the same period last year.
It was a problem that the government and the central bank interpreted economic indices artificially and publicized them one-sidedly when they forecast the prospects for the economy. At the beginning of the year, the government optimistically assured the public of a recovery, emphasizing the improvement in psychological indices although indicators of the real economy were bad. The president and the deputy prime minister for economy said in unison, “All economic problems are resolved.” Now, the government assures us of a recovery saying that indices of the real economy are improved although psychological indices have deteriorated. It is, therefore, difficult to believe the government’s economic prediction.
The government can no longer persuade people with predictions based on standards that are changed from time to time. The administration and the central bank must predict economic movements accurately based on what the people perceive and using a consistent standard, not based on political considerations or publicity aimed at winning the minds of the people. Only then will it be possible to decide proper economic measures. When people’s confidence is restored, the efficiency of government policy will also be enhanced.