Economic leadership vacuumImports and exports have been on a downward spiral since January, and the consumer price index has hovered near zero. Industrial production decreased 0.6 percent in March compared to February, which included the Lunar New Year holidays. The capacity utilization rate in the manufacturing sector stood at a mere 73.6 percent in March - the lowest level since May 2009 when it was 73.4 percent during the global financial meltdown. We are concerned about tangible signs of a wide-ranging and persistent slump in which the entire economy falls into a long-term recession.
Prospects for recovery are not bright. U.S. growth was only 0.2 percent in the first quarter, defying the confident prediction of President Barack Obama in his State of the Union address in January. China, the locomotive for the world’s economy, is expected to barely achieve its original goal of 7 percent growth this year. The slowdown of the two largest economies casts a pall over our exports. Korea’s exports to America dropped 0.8 percent year-on-year in April, the first downturn since the second half of 2014.
Meanwhile, exports to China have been declining for three consecutive months. Considering the continuous fall in world trade growth rates, we can hardly expect a rebound in exports soon. Given its heavy reliance on exports for growth, our economy will certainly be hard-hit.
Despite such a dire situation for our economy, the government is in colossal chaos. Choi Kyung-hwan, the deputy prime minister for the economy and finance minister, is busy acting on behalf of former Prime Minister Lee Wan-koo, who recently stepped down over a payoff scandal. As a result, officials in the finance ministry have to wait for the acting prime minister in front of the Office of the Prime Minister to obtain approval for various plans. Choi also has to attend a countless number of official ceremonies and events - one of the major tasks of the prime minister - which makes it more difficult for him to concentrate on the economy.
But we are more concerned about the acting prime minister’s perspectives on our economy. He recently expected our growth rate to exceed 1 percent in the second quarter, probably based on hoped-for recoveries by the stock and real estate markets. But it will end up nowhere without the real economy backing it up. Choi must minimize his ceremonial duties and return to his original role as head of the government’s economic team to rejuvenate our supine economy. He must demonstrate strong economic leadership.
JoongAng Ilbo, May 2, Page 26
with the Korea JoongAng Daily
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