Economics before electioneeringBad economic news follows one after another: a rumored bailout for cash-stripped Spain, dire indicators for employment in the United States, slowdown in China’s imports, to name a few. A possibility of the Spanish economy immediately heading to a bailout is not that high. But it does not mean the overall uncertainties of the European economy will disappear soon. If Europe is to overcome the fiscal crisis, Spain and Italy must launch a painful austerity program, but both countries do not appear to welcome it.
Due to structural loopholes in the EU, European economy will most likely fluctuate with a colossal crisis looming. If the continent is in such a bad shape, America and China should at least prop up the plummeting European economy. That possibility, however, is slim due to the lackluster employment indicators in the U.S. and the gloomy economic slowdown in China.
The iffy world economy is an ominous sign for our export-oriented economy, which calls for a maximization of our internal capability to effectively cope with them. But that also looks hard to achieve as the government can hardly maintain its economic momentum with the lame duck phenomenon deepening, particularly so under a situation where opposition parties have a bigger say in the National Assembly. Paradoxically, however, the government has a bigger role than otherwise. Only when it retains power to copes with an economic crisis can the government overcome it successfully.
The government must be on alert to closely monitor the stream of real economy and remove negative factors in advance. We urge it to first eliminate widespread mismanagement in the financial market. The government must also launch a restructuring of the shipping, shipbuilding and construction industries which have been running the risk of insolvency, not to mention finding ways to address the conundrum of our ever-expanding household debt. No doubt the basic law to promote service industry, a revised law to effectively support small, innovative enterprises and a pharmaceutical law to allow convenient stores to sell over-the-counter drugs are not an issue of contention between ruling and opposition parties.
The government must resist temptation to put into action half-baked ideas for stimulating the economy. Now is the time to conclude the administration’s previous policies, not a time for managing the economy ahead of the presidential election in December.
Effectively blocking an explosive demand for populism is one of the major tasks of the government. With our national debt over 400 trillion won, it must refrain from indiscriminate spending. There is no ruling or opposition party when it comes to the crisis management. We must not go back to the cataclysmic foreign exchange crisis in 1997.