Stop anti-market policyThe Korean won is falling. It hit 1,170 won to the dollar shortly before the Children’s Day holidays. That’s a 27-month low against the dollar. The rapid moves adversely affect the stock market due to foreign investor fears of exchange rate losses, as seen in the 1997 Asian financial crisis and the 2008 global financial meltdown. The Moon Jae-in administration must not ignore the alert.
Unfortunately the Korean economy is not showing any signs of recovery. The five major economic indicators — on investment, production, consumption, employment and export — are all sounding alarms, further weakening the won. On top of that, geopolitical risks stemming from North Korea’s recent firing of a new type of short-range ballistic missiles are not helping.
No light is seen in the tunnel. Despite the government’s praise of a temporary rebound in production, consumption and investment in March as evidence of “good momentum,” most analysts attributed it to the government’s massive stimuli packages in the previous month. As it turned out, our growth rate fell 0.3 percent in the first quarter. The negative export growth rates for five consecutive months since December makes the further complicate the situation.
To make matters worse, after U.S. President Donald Trump threatened to impose additional tariffs on Chinese imports, the Shanghai Stock Exchange Composite Index fell by more than 5 percent on Sunday, further damaging our exports. While the U.S. economy enjoyed a boom after its jobless rate dropped to 3.6 percent last month and the Chinese economy experienced 6.4 percentage point growth despite concerns, our economy is heading to the opposite direction.
The government must immediately change course on economic policy. As companies increasingly ask for it, the government must ease their anxiety by fixing all the problems with its two-year-old “income-led growth” policy. Thanks to the bold experiments our youth unemployment rate has exceeded 24 percent and the income gap is widening faster than ever.
Only when the government changes its direction can it revive the economy. Indicators of our present and future economy were all negative for 10 months in a row. Despite the government’s vow to realize “economic justice” by reinforcing the commercial law and the fair trade law, we cannot expect positive effects under current conditions as companies are pouring their available financial resources into fending off attacks by predatory funds.
The shortcut to put the economy back on track is stopping the government’s ungrounded anti-market, anti-business experiments to send the corporate sector a clear message that it respects the market and enterprises. That will also help calm foreign investors.
JoongAng Ilbo, May 7, Page 30