[Editorial] One year after the Daewoo collapse

One year has passed since the crisis involving the Daewoo Group came out into the open. On July 19, 1999, Daewoo group chairman Kim Woo-Choong held a press conference and announced that he would normalize his cash-strapped businesses and then resign in six months. With the breakout of the Daewoo incident, the stock market plunged and there was increasing concern that the nation would be hit by a second financial crisis. Afterwards, Daewoo went belly-up, leaving behind a combined debt of 90 trillion won, including 60 trillion won in domestic loans and 30 trillion won in foreign liabilities.

As a result, financial institutions were driven into the abyss of insolvency and the financial markets descended into deeper chaos. The Daewoo case was a clear example of what consequences a business operation with excessive credit and reckless management can bring about.

Today, one year after the Daewoo breakup, we must question how well the nation has freed itself from this nightmare. Regrettably, many experts are incessantly sounding alarms about another economic crisis.

Following a rare warning from the Bank of Korea president about the national economic outlook for the second half of the year, the Korea Financial Study Institute expressed a pessimistic view of the future economy. The International Financial Center, which operates under the government, also presented a report that portrayed the national economy in a negative light, and the Korea Economy Research Institute, under the Federation of Korean Industries, underlined the need for financial market stability, pointing out that far more bad loans exist than the government has announced.

Of course, economic projections may vary, depending on the standards and methods of analysis. But the one clear thing is that our economy has not fundamentally reformed.