[EDITORIALS]Don’t ignore the economyThere are signs everywhere that the economy is in a down cycle. Last month, for example, the number of newly established companies was at its lowest level in 17 months. Due to the real estate economic slump, people worry that local construction companies will shut down, and many expect that the production industry index and service industry index of July will show little progress. Nonetheless, the government assures the public, saying, “Do not be disturbed even if the index comes out badly,” arguing that it is only a temporary situation due to automobile industry strikes and the aftermath of floods.
We desperately hope that what our government is saying is correct, but the reality does not look good. What is most disturbing is that the world economy is now in a tailspin as well. The U.S. economic growth rate is expected to drop below 2.5 percent next year, after showing growth in the 3-percent range this year. According to the Hyundai Research Institute, “China, Japan and the EU economies will also enter a downturn.”
It is apparent that Korea, which relies heavily on foreign economies, will be seriously affected. If exports slow down in a situation where domestic demand is so low, it is true that there will be nothing else to rely on. And most of all, domestic demand shows no sign of reviving in the near future.
Foreign companies are not likely to show up with money wrapped in bundles, nor are domestic companies showing signs of investing. This is why in some parts of the country, people worry about the rapid cooling of the economy.
Whether the government knows this critical situation or not, it just keeps saying, “We will achieve 5-percent growth this year.” The government says it will announce a plan to improve the business environment next month. But we are not sure what kind of plan it will announce while leaving the area of metropolitan regulation as sacred ground. The New Deal policy of the administration included plans to eliminate the law restricting the total amount of investment, but it is not clear whether it will succeed.
The Bank of Korea was busy fussing to raise the interest rate after watching other countries raise interest rates.
With the whole country drowning in the “Sea Story saga” is there anyone looking after the economy?