Warning On Economic Optimism

The heads of the Korean economy, Lee Hun-jae, the minister of Finance and Economy, and Park Seung, the governor of the Bank of Korea, warned of careless optimistic views on the Korean economy.

Since the beginning of the year, by setting forth economic indexes like sales at department stores and the amount of money used on credit cards, the government has spread the anticipation that the Korea economy will soon recover.

It was told that Minister Lee and Governor Park presented a “prudent view” to soothe the anticipation of the people, who are overly aroused.

In a press interview on February 15, Minister Lee said, “Although domestic demand is starting to recover, it’s hard to say that the whole Korean economy is going to recover, since the construction business is still frozen.”

Then, he added, “In order for more jobs to be created, the construction business should recover, and the created jobs will hasten the recovery of demand. Yet, this circulation has not happened.”

Minister Lee is saying that more time is required to judge whether this recovery of domestic demand is a momentary happening or a sign of Korean economic recovery.

To a question asked during an interpellation session on the economy, Lee answered, “Although there are several signs that the economy is recovering, it yet requires prudence.”

Lee also said, “It seems like that the economy is recovering through its self-surviving power created by not practicing artificial policies to boost the economy.”

Also, during a press interview held after a meeting of the Monetary Policy Committee, Park said, “Although several indexes show better economic conditions, judgment on whether it’s momentary or continuous can only be made in March or April at the earliest.”

Park also said, “Overall, it’s more of an upward trend than downward. Although it’s not spring yet, it seems that the most intense cold has passed.”

Nongovernmental experts also pointed out that to continue this upward trend of Korean economic recovery, careful political support is required rather than too much optimism.

Meanwhile, the Monetary Policy Committee has decided to keep the call rate at the current level, 3.25 percent..

The call rate, which had dropped from 3.50 percent to 3.25 percent last November, has kept its current level for three straight months.

Chi-Young Shin Kyung-Joon Chung higgledy@donga.com news91@donga.com