Time to get back to businessThe National Assembly has gone to the historic vote to impeach scandal-ridden President Park Geun-hye for shamefully disgracing the national name and breaking the trust with the people and constitution through illicit abuse of power. Unprecedented insecurity in state affairs is unavoidable. Everything within the executive and administrative authority spanning from the defense to economic front would be shaken. In the worst case, the government would become dysfunctional, or even completely impotent. What is most worrisome is the economy. Regardless of political insecurity, the economy must be business as usual.
The economy does not tolerate insecurity. The local economy has been left unattended because all attention was paid to the scandal involving the president and her friend Choi Soon-sil. Challenges and uncertainties on the domestic and external front have snowballed. It is hard to decide what is most dangerous. Corporate sales have dipped and consumer sentiment has slipped to a seven-year low.
Economic institutes have all turned more skeptical about next year’s economy. The state-run Korea Development Institute shaved its outlook for next year’s economic growth to 2.4 percent, a rare move since the state think tank usually backs the government’s relatively buoyant outlook. It indicated further downgrading, saying it had not factored in political insecurity from impeachment or an earlier-than-scheduled presidential election. The corporate sector cannot make business plans for next year due to foggy prospects. Consumers are weighed down by debt and cannot afford any spending. Retailers are struggling to keep their business running. But there is no economic leadership to combat these challenges.
Conditions on the external front are worsening. The U.S. Federal Reserve is ready to renew lift-off in interest rates next week. Although a hike was forewarned, emerging markets could suffer a rout run. Higher interest rates could shake the household debt that has reached explosive levels and crumble along with the real estate market. The economy is full of ticking bombs requiring subtle as well as precise policy moves to remove the uncertainties in the market. The incoming administration of Donald Trump has been filled with hardcore surrogates and supporters of the “America First” policy. Seoul may have to brace for renegotiation on the bilateral Free Trade Agreement or cost-sharing on U.S. troops in Korea.
Yet Korea is lost because it lacks an economic command center. Seoul cannot fight immediate dangers nor draw up next year’s outline. If the economy goes down, everything goes with it.
Politicians should immediately get to work to restore state order. The first thing is to rebuild the economic command center and form an emergency economic committee to tend to the economy.
JoongAng Ilbo, Dec. 9, Page 34