Red alert for growthFinancial turmoil that began with subprime mortgage issues in the United States is likely to induce a general downturn in our economy. Various U.S. indexes are showing red, as unemployment soars and consumer spending decreases. The U.S. government and the Federal Reserve Board are busy preparing short-term reflationary measures, including tax returns and low interest rates.
However, some experts view an economic downturn as inevitable. Since a slump in the U.S. economy will cause a decline in the world economy, the Korean economy is not exempt. Some analysts argue that if the U.S. growth rate drops by 1 percent, Korean economic growth rate will fall 0.5 percent. The Lee Myung-bak administration has highlighted reviving the economy as its top priority. But it appears to have met a huge obstacle before it even starts in government.
The Lee administration-in-waiting modified its promise of 7 percent growth every year. To that end, people hold high hopes for the incoming government. The problem is how to steer through the treacherous currents of today’s world economy
President-elect Lee Myung-bak vowed he would not employ short-term artificial inflationary measures. Well said, indeed. Then where will he find clues to restore the locomotives of growth? Supposing the external conditions of our economy worsen, the answer has to be found somewhere.
If we dismantle only those regulations that currently hold companies back, we can compensate for the slowdown in economic growth.
We believe the growth locomotives will be engaged soon if the conditions are met for entrepreneurs by easing those regulations.
Relieving regulations requires neither extra-tax money nor the burden of infusing the market with more money. It creates a shortcut to facilitate the generative power for long-term economic growth without using short-term measures.
However, as pointed out by the president-elect, bureaucratic loopholes slow down reform.
The Lee Myung-bak government is bound to initiate a radical breakdown of regulatory hurdles if it wants to keep its promise and revive the economy.