[Focus] Three meanings of Dong-a¡¯s economic survey

The survey on Korea¡¯s economy for next year conducted by Dong-A Ilbo of 50 local experts (reported on Monday) gives some helpful clues in diagnosing the nation¡¯s current economic situation and suggesting solutions to finding a way out of the difficulties. The survey results also display some remarkable views that differ from ideas spread across the country.

Korean economy is not in the crisis:

Many Koreans are uneasy about the nation¡¯s economy, thinking that it could be about to face another round of crisis or has already fell to a severe situation.

However, a slowdown or a depression should be distinguished from a crisis. Experts share the view that the Korean economy is suffering from hardships, but they do not agree that crisis will be or is already pressing the county.

A majority, 92%, of respondents said there was little chance of a recurrence of the foreign currency crisis. Only 8% saw a high possibility of the currency crisis.

Nevertheless, it is worrisome that 58% of respondents forecast a possible stagflation, a compound of stagnation and inflation. In particular, 90% of executives from local large conglomerates and experts from economic research institutions, the academic circles and foreign financial institutions agreed on the possible occurrence of stagflation.

Overseas economic factors are not bad next year:

Bad factors coming from overseas markets deal a fatal blow to Korea, which has a high dependency on exports. The survey results made prospects look good. One from three respondents saw a slim chance of a foreign exchange crisis for next year. Also, 76% doubted the possibility of a hard landing of the U.S. economy. For oil prices, more people answered that the prices of Dubai oil would fall to US$27 per barrel from the current US$30 mark.

Han Sung-Taik, director general of the Economic Policy Bureau at the Ministry of Finance and Economy said that stabilization of the two major factors -- oil prices and the U.S. economy -- will be a great help to Korean economy for next year.

No way out without restructuring:

Currently, Korea is in the throes of the second round of financial and corporate restructuring. Where ¡®restructuring¡¯ is identified with ¡®layoff,¡¯ the resistance from labor circles is understandable. However, the survey result demonstrates the grim reality that Korea¡¯s economy has no way out if it fails to restructure as early as possible.

The political and government sectors are also worthy of attention. As a stumbling bloc to the nation¡¯s economy for next year, political controversies (17 respondents) and the President Kim¡¯s political failure including lame-duck problem (10) came in the fourth and fifth places, respectively. This strongly suggests that the politics should not put fetters on the economy and that the government and the ruling party should take the lead in restructuring.