Cannot Forecast the Economy

Korea Development Institute (KDI), a representative body of national policy research, abruptly canceled the presentation of the "Quarterly Economic Outlook," which was scheduled this week.

It is the first time in seven years in which the KDI did not present its outlook report. The last cancellation occurred in the fourth quarter (October~December) of 1997 when the foreign currency crisis occurred.

The KDI has been propounding quarterly reports every April, July, October, and December, four times a year, and in particular, it has given economic outlook indices including annual growth rate in its third quarter report presented in October.

Concerning the point, the KDI officially made it clear yesterday, "We decided not to make the presentation as we concluded that the economic effect of the Constitutional Court`s ruling against capital relocation was not fully reviewed."

Yet, most analyze that the cancellation frankly shows that the economic outlook is so bad that it is burdensome to present the report.

In fact, a KDI authority said, "I understand that the KDI was not confident about the outlook (in this situation)."

Many suggest that the decision to cancel the presentation was made after the KDI had anguished between the government`s view, which publicly claims that Korea will achieve a growth of somewhere near five percent next year, and the "reality," which does not allow such a prospect regarding the current economic situation.

There is also an analysis that the KDI did not submit its report because it acknowledged that the economic prospect is as opaque as it was during the foreign currency crisis.

It was reported that the KDI will suggest next year`s expected annual growth rate in its fourth quarter report in the beginning of December, and it is highly likely that the KDI will suggest somewhere near four percent.

The rate is similar to those presented by private research institutes, from 4.1 to 4.5 percent, and it is a little bit higher than Samsung Economic Research Institute`s 3.7 percent.

Ji-Wan Cha cha@donga.com