Keep the recovery going

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Keep the recovery going

Department stores and superstore chains sold more Chuseok holiday gifts during this year’s holiday season than last year’s. Sales of gift packages at department stores picked up from 4.2 percent a year ago to 10.2 percent.

Sales were up from 0.7 percent to 3.4 percent in superstore chains. The Ministry of Strategy and Finance estimates gift sales also rose about 12.5 percent and 13.8 percent, respectively, at smaller supermarkets and farm markets.

Automobile sales rose over 30 percent in the first 20 days in September from the same period a year ago. The composite consumer sentiment index compiled by the Bank of Korea rose for the third consecutive month to reach 103 in September. A reading above 100 suggests people are more optimistic about the economy.

Although fragile, domestic demand may be finally recovering, Choi Kyung-hwan, deputy prime minister for the economy, said data in consumption and the services sector show signs of improvement. But small improvements in retail sales cannot suggest the economy is recovering.

The uptick may be temporary thanks to tax cuts and other incentives from the government. Private consumption fell 0.2 percent in the second quarter, raising the alarm for a structural slump. A chronic illness cannot be cured overnight. To keep the recovery alive, authorities must continue with rigorous and longer-lasting programs. The so-called “Korea Black Friday” event the government is sponsoring is a good start.

The two-week event that starts from Oct. 1 includes over 27,000 department stores and shops offering discount rates of up to 70 percent. It is the largest collective bargain sale in Korea. But this too is a makeshift action.

People will spend only when they feel more secure about their financial state and future. Without solutions to the runaway rent prices, retirement security and youth unemployment, the country’s domestic demand cannot truly recover. Incomes and the number of jobs need to increase.

Labor reforms should be accelerated so that the younger generation can find work, and regulations must be axed so that companies will be encouraged to make new investments. Without painful restructuring, the country cannot survive the challenges
on both the domestic and external fronts. There
are signs of hope, but keeping them alive is
important.

JoongAng Ilbo, Sept. 30, Page 26
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