[EDITORIALS]Blind eye on the economyKorea’s current account balance for April recorded the largest deficit in nine years. About $1.5 billion in the red, it was also the third consecutive monthly current account deficit. There was a seasonal factor: Companies paid dividends to overseas investors last month. But what is troubling is the decrease in the trade account surplus.
Of course, a shaky current account balance will not deal an immediate blow to our economy. Still, with domestic demand and corporate facility investment again frozen after showing signs of recovery, we cannot afford to have our exports, the bulwark of our economy, lose strength. At this pace, the future of our economy does not seem very bright. While international prices of raw materials remain sky high, those of information technology-related products, our key items, are nose-diving. Hyundai Motor, for instance, has begun offering massive discounts in the North American market at a time when it should be raising its prices to compensate for the weak U.S. dollar. But Japanese carmakers have been cutting their prices in an effort to make further inroads into the North American market, so Korean counterparts have been left with little choice. It is obvious that Hyundai Motor will lose money for a while, and the company is far from the only Korean firm dealing with the same dilemma.
But the government is consumed with real estate policies and has paid very little attention to other economic policies. Asking our leading exporters to help out small and medium businesses and to make financial contribution to charities when they are already engaged in competition on the global stage is an extra burden. When criticized about the failure of measures to curb real estate speculation, the administration continues to claim that they will work out by the time the next administration comes into power.
But regardless of who arrives next at the Blue House, the problem will not be resolved easily. With facility investment growing at less than 1 percent annually for the last five years, the economic prospects for the next three or four years are bleak. And a new administration will have a difficult enough time simply trying to clean up the mess created by the current administration. Certainly, both the domestic and global economic situation is in decline. President Roh Moo-hyun has repeatedly guaranteed that there would be no economic crisis in the foreseeable future. But we get the sense that the administration does not recognize the negative signs around us. We hope it wakes up and joins the rest in bracing ourselves.