Turn the mood around
The Korean economy is staggering due to a triple whammy of the “super-dollar,” China’s fast industrialization and the devaluation of the Japanese yen. Amid signs of a seismic shift in the global economic structure, our economy is having trouble finding a breakthrough. We wonder if President Park Geun-hye’s over-hyped “creative economy” initiative and Deputy Prime Minister for the Economy Choi Kyung-hwan’s stimulus measures through hefty infusions of liquidity to the market can’t really overcome the turbulent waves of the global economy. In fact, Korea’s Consumer Confidence Index in the third quarter of this year fell to 57th among countries, even lower than Greece, which is on the brink of a national default.
The whole world is struggling to fight economic woes simultaneously. The United States seeks an economic rebound through the shale gas revolution and revitalization of its manufacturing base. Thanks to those new pockets of activity, America saw its jobless rate fall and the Federal Reserve ended its quantitative easing (QE). Across the Atlantic, the UK is expected to achieve a remarkable growth rate of 3.2 percent this year thanks to the government’s lowering of benchmark rates to confront the global financial meltdown and to the rapid rejuvenation of the private sector - especially the services and properties markets - through drastic deregulation. Japan is betting on Abenomics and Europe on limitless QE.
But our economy is in a lethargic state because of timid consumption due to low growth and the rapid ageing of the population. In such circumstances, economic revitalization is a pipe dream. As a matter of fact, local enterprises’ facilities investments dropped 1.5 percent last year despite large companies’ increased operating profits.
While the three lows of the 1980s - low interest rates, a weaker greenback and cheaper petroleum - helped our economy, the new three lows - low growth rates, low prices and a weaker yen - all wreak havoc on our economy. So SK hynix’s surprising performance attracts our attention. After investments of billions of dollars since merging with Hynix two year ago, the company has now enjoyed more than 1 trillion won (920.8 million) in operating profits for three quarters in a row, and it’s competing with Hyundai Motor for the rank of second biggest Korean company in terms of market capitalization.
Economic recovery does not come from a government. It all depends on the economic players’ enthusiasm. The government and private sector alike must turn the mood around fast.
JoongAng Ilbo, Nov. 7, Page 34