An all-too-familiar feelingThe troubles in the Korean economy feel all too familiar, and intellectuals and experts are raising the alarm that they are the same symptoms we experienced in late 1990s when the country demanded international bailout.
On Friday, 1,000 intellectuals issued a statement demanding urgent action to reel back an economy teetering on the brink. They pointed out the similarities in today’s circumstances to late 1996 when multilateral woes added to domestic troubles that spilled over into the following year and sent the country seeking a multi-billion-dollar loan from the International Monetary Fund.
At the time, the international markets were volatile amid expectations for U.S. monetary tightening and weakening in the yen and yuan. The domestic labor market was turbulent from endless strikes. It is deja vu when looking at today, with the growing overseas risks, the legislative deadlock and labor strife over reform plans.
But the situation today is even worse. Local companies’ combined sales fell 1.2 percent last year from the previous year - the first decline since the national statistical office began compiling data. Sales from manufacturers dropped 3.8 percent due to poor performances by the exporters that have historically sustained the economy. For the first time since 2011, the country may not record a trade turnover of at least $1 trillion this year.
The economy is most certain to miss this year’s growth target of 3 percent. The Bank of Korea and international organizations like the OECD and IMF downgraded the estimates Korea’s economy will grow 2.7 percent for this year. Inflation is expected to hit 0.7 percent this year, the lowest since the 0.8 percent recorded in 1998 following the financial crisis.
Although the economy is sinking fast, there is no sign of hope from the leadership. The group of 1,000 intellectuals named the National Assembly as biggest culprit for today’s economic crisis. Various economy-promoting bills such as the service sector advancement law have been gathering dust for years. The approval of the bill on Korea-China free trade agreement is also delayed because the main opposition has been linking it to unrelated issues like the extension of the Sewol ferry special investigation period.
The rise in emerging economies helped the country’s economic turnaround in the past. But today we cannot expect any external support. This is no time for fighting amongst ourselves. We must be united to fight these hard times.
JoongAng Ilbo, Nov. 30, Page 34