Economy Primed for Earnest Recovery

Lee Hun-jae (photo), deputy prime minister and minister of Finance and Economy, expressed positive opinions on economic recovery on February 4, saying, “The economy is showing signs of transition right before an earnest recovery.”

Deputy Prime Minister Lee said in a regular briefing that day at Gwacheon Government Complex, “All in all, positive statistics in terms of exports and domestic consumption recently continue to be announced, compared with late last year.”

Lee went on to say, “Domestic car sales and department store revenues are increasing and the number of credit card delinquents is on the decline,” stressing, “Exports are expected to remain strong in February and at least well into the first half of this year.”

He explained, “There can be a mixture of positive statistics and negative statistics in the process in which the economy hits the bottom and starts to turn around. But there’s no need to look at that too negatively,” adding, “As the momentum of economic recovery started, the momentum could lead to a longer growth phase depending on our efforts.”

The deputy prime minister also said that he would make it a rule to announce economic trends twice a month, every first and third week to be specific, for a precise economic prediction. He added that he is planning to publicize the results of the economic examination through the early warning system (EWS) once a month.

According to a survey by the National Statistical Office (NSO) released that day, consumer sentiment is showing signs of improvement.

“The January 2005 consumer expectation survey” released by the NSO indicated that the consumer expectation index, meaning the expectation of consumers for the state of the economy over the next six months, stayed at 90.3, the first increase in four months. The figure is the highest in seven months since 94.8 in May of last year.

However, experts in the private sector continuously point out that it is premature to say that the economy is starting to pick up.

Furthermore, some say that the domestic car sales record of January has been exaggerated, as some automakers have had their dealers take over large numbers of their products to boost sales records since the end of January.

The Samsung Economic Research Institute said in a report released on February 2, “It is hard to consider that consumption starts to pick up in earnest. Recent developments like rise in department store revenue are highly likely a passing phenomenon.”

Director Lee Eon-oh of the research institute said, “It is notable that psychology is improving,” adding, “But it is hard to say that the economic recovery has started in earnest as the constitution of the economy has not changed much from last year.”

Chi-Young Shin higgledy@donga.com