Shame on the finance minister

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Shame on the finance minister

Finance Minister Choi Kyung-hwan said the Korean economy was faring pretty well, considering various external factors and challenges at home. He ignored concerns of another liquidity crisis and held that the economy could have grown closer to 4 percent this year if exports had done better.

That should have been a relief, but let’s not forget Choi is also planning on running in next April’s legislative election. Was he speaking as the head of economic policy, or as a politician ahead of an election?

Late last year, Choi predicted this year’s growth would be 3.8 percent. It stopped just above 3 percent in the first half and hovered at mid-2 percent throughout the second. The Korea Development Institute recently predicted this year’s growth to be 2.6 percent, in line with estimates by foreign institutions. If that’s true, the Korean economy will have done worse than the global average. Most are also skeptical the economy could grow 3 percent next year as well.

Let’s look at what else has happened while Choi has been in office.

Household debt ballooned from 1,035 trillion won ($8.8 trillion) to 1,200 trillion won, increasing by 10 trillion won every month.

The ratio of household debt to disposable income, which was among the lowest in the Organization for Economic Cooperation and Development at the end of last year at 164.2 percent, will reach 170 percent by the end of this year.

National debt will increase by over 50 trillion won next year to reach 645 trillion won, exceeding 40 percent of the gross domestic product for the first time.

Public liabilities will have surged 56 percent, or 269 trillion won, during President Park Geun-hye’s five years in office, outpacing the rise of 48 percent, or 143 trillion won, during President Lee Myung-bak’s tenure, which saw a global financial crisis.

Combined sales of Korean companies fell for the first time ever this year, and exports have plunged by double digits.

On what basis is the economy faring pretty well?

Choi started off promising, but all the actions he’s taken were based on debt. Although there have been unexpected setbacks, the government had done little to stimulate meaningful growth or address demographic challenges. He has left little ammunition for the incoming finance minister. We cannot understand how he dared congratulate himself. Choi’s experiment shows a politician is not fit to run the economy. JoongAng Ilbo, Dec. 12, Page 30
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