Do not dismiss Financial Times’ warning

The Financial Times has acutely pointed out the vulnerabilities of the Korean economy. In a feature story titled “Is South Korea’s economic miracle over?” in Tuesday’s edition, the newspaper cited major problems — the limits to the state-led development model based on cheap labor, a rapid reduction in globally competitive technologies due to a critical lack of foundation technology, and a death of challenging spirit from third-generation owners of conglomerates. The paper also linked it to Korea’s population crisis from its ultralow birthrate, household debt and a pitiful stall in restructuring.

That’s not good news for the country. But what the paper pointed out is nothing new. Local media and economic experts have long pointed to those problems as key obstacles to further developing our economy. In an article titled “Sinking feeling” amid the 2008 global financial crisis, the newspaper shed light on the economy to embarrass the government. This time, the government can hardly refute the claims.

The paper sharply pointed to “the political leadership split between a leftwing-controled legislature and an unpopular conservative presidential administration.” The paper raised the prospect of “more than three years of gridlock” until the next presidential election in March 2027. Due to a lack of political leadership, it would be difficult for Korea to address its low birthrate, achieve structural reform in the energy sector and advance its capital market in the near future.

The paper’s diagnosis is precise. Ahead of the upcoming meeting between President Yoon Suk Yeol and Democratic Party leader Lee Jae-myung, the Lee-proposed 250,000 won ($181) relief for each citizen to help ease people’s economic plight has emerged as a hot button. The payout calls for a 13-trillion-won supplementary budget. But it is against the law for the government to draw up a supplementary budget without an economic crisis or massive disaster. The payout could deepen public anxiety about inflation and compromise our fiscal health.

Due to the corporate sector’s deteriorating profits, the government must prepare for a reduction in tax revenue. A local media outlet even reported that Samsung Electronics does not have to pay any corporate tax this year due to its worsened profit last year. Arguing for cash aid under such circumstances does not fit a responsible majority opposition.

The paper quoted Finance Minister Choi Sang-mok as saying, “Dynamism is embedded in Korean DNA. We need to redesign policies to unleash that economic dynamism, but the miracle is not over.” It is natural that a government official shows optimism about the economy. But unfortunately, reality points in the opposite direction.