The gathering storm

The world’s economy seems to be creeping toward a downturn. With international oil prices continuing to soar, more and more signs are emerging that the global economy won’t be able to avoid a serious slowdown.

Some worry that the U.S. economy, the world’s largest marketplace, might have entered a long-term period of slow growth.

As the housing market in the United States has been stagnant, the forecast is that if another credit crisis hits in the wake of the subprime mortgage disaster, while high oil prices are continuing to apply pressure, the U.S. economy will lose the capacity to quickly bounce back.

The crisis in the financial sector is finally under control, but the woes are spreading to the greater economy. Thus, there is a bigger chance that the overall U.S. economy will enter a downturn which will probably last for a long period.

A good example among these signs is the possibility that General Motors will go bankrupt.

The credit crunch caused by the subprime mortgage crisis weakened consumption significantly in the United States. That led to slow sales, and thus manufacturers have been pushed to the limit.

The U.S. investment bank Lehman Brothers forecast that the U.S. economic growth rate wouldn’t be negative for many years, but that the economy would continue to see slow growth of around 1 percent for a long time. That means the economy won’t collapse entirely, but it will be crawling at the bottom for a while.

A long-term slowdown in the U.S. economy will likely lead to a worldwide economic downturn. The side effects will be serious and will perhaps endure for long time. Korea’s economy would be seriously damaged, as it is heavily dependent on trade.

While Koreans stay up until late at night attending candlelight vigils, or hinder economic growth staging illegal strikes, the economic climate outside Korea has grown hostile. It is past the stage where we should worry about a domestic economic slowdown. A crisis is taking shape before our eyes.

We might have to go through a slump which is more serious than the foreign exchange crisis, and for a longer period.

The administration must be aware of the seriousness of the situation and do its best to draw up appropriate measures. The people also must have a sense of urgency, and be prepared to overcome an imminent economic crisis.