Darker prospects aheadLocal economic think tanks are coming up with gloomy prospects for next year. In a recent report on the outlook for the Korean economy in 2019, the Hyundai Research Institute forecast that our growth rate will be a meager 2.6 percent next year. The institute also forecast that investments in construction will noticeably slow along with decreased growth rates in facilities investment, civilian consumption and exports in 2019. Earlier, LG Economic Research Institute, another major think tank, lowered its forecast for our economic growth rate to 2.5 percent.
These non-government research institutes are more pessimistic about the prospects for our economy next year than the government and the Bank of Korea, both of which expect our economy to achieve 2.8 percent growth next year. The Organization for Economic Cooperation and Development (OECD) and the Asia Development Bank also lowered their prospects for our economic growth for this year and next year.
Given the Federal Reserve’s recent decision to raise its forecast for U.S. economic growth to 3.1 percent from 2.8 percent, our economy will likely show growth even lower than in the United States. It was only in 1998 — shortly after the 1997-98 foreign exchange crisis — and 2015 that South Korea has recorded economic growth lower than in the U.S.
That’s not the extent of the bad news. The two research institutes predict that our jobless rates and other employment conditions will also be worse than in the U.S. The monthly average of unemployed in this country from January to August reached a whopping 1.13 million — the largest since 1999 after the foreign exchange crisis — while the government’s payouts to the jobless amounted to more than 4.5 trillion won ($4 billion) during the same period.
In the face of such dire forecasts, the government is still trying to sound optimistic. Yoon Jong-won, senior presidential secretary for economic affairs, said our economy is doing pretty well, based on his analysis that it has been maintaining “solid growth” between 2.8 percent and 2.9 percent.
The government should be fully cognizant of these dire economic predictions. It must help the corporate sector — a major engine for employment and growth — to invest more and accelerate deregulation and innovative growth across the board. We also hope the government pays special heed to macro-economic aspects so as not to take the steam out of our real estate market even while trying to stabilize soaring housing prices.
JoongAng Ilbo, Oct. 1, Page 30