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[Editorial] Economic Responsibility

Posted November. 30, 2006 06:49,   


President Roh Moo-hyun’s speech on the possibility of abandoning his party affiliation and stepping down has caused great confusion in the political community. The sole interest of President Roh and politicians appears to be political infighting. They don’t seem to be concerned with the people’s economic difficulties at all.

The economy has been stuck in low growth mode over the past several years. The GDP in the third quarter barely managed to increase 0.9 percent compared to the previous quarter. In terms of annual growth, the figure can be translated as 3.6 percent, indicating sluggish economic growth.

The Organization for Economic Co-operation and Development (OECD) said in its economic outlook report for the second half of this year that the GDP of Korea is expected to increase 4.4 percent, down 0.9 percent compared to its previous projection in May. This indicates that Korea’s economy has lost a significant degree of vitality over the past six months. The OECD pointed out the uncertainty of the North Korean nuclear crisis, high household debt, and a decrease in private consumption due to rising interest rates are risk factors in Korea’s economy in 2007.

If the political chaos continues through the presidential elections in December 2007, the Korean economy may suffer even more.

Corporate investment is expected to increase only 3.7 percent next year. The Korean economy has witnessed dwindling domestic investment over the past five years. Since decreased investment will lead to low economy growth, regardless of who becomes the next president, he or she will face a great deal of difficulties in recovering Korea’s growth potential.

The continuing weak dollar trend is another major threat to Korea’s economy, which is heavily dependent on exports. Every time the dollar depreciates, the Korea Composite Stock Price Index falls as well. Korean businesses are also suffering from the weak yen and high oil prices.

Despite the worsening situation, no one seems to have the leadership to stimulate the growth potential of the national economy to revive Korea’s economy. Even if President Roh and both ruling and opposition party lawmakers discontinue their ideological infighting and do their best to recover the devastated economy, they will find it very challenging. Despite the problem, President Roh and politicians have been ceaselessly pouring out bewildering comments that cause a political stir and make the people and businesses even more anxious.

The leadership of the government is directly related to the national economy. As seen during the end of the previous presidents’ terms, the government loses control to implement policies due to lame-duck politics and growing anxiety in the market and society. Experts are concerned that the Roh government is likely to suffer even more than previous governments in gripping control over its policies.

Meanwhile, President Roh visited Mokpo on Tuesday to tour a site developing a comprehensive plan for the southwestern region. “The Kim Dae-jung administration completely changed the structure of the Korean economy,” President Roh said on the day, praising the achievements of former President Kim. The Roh administration has been saying that the Kim administration’s artificial economic stimulus package is responsible for the current economic difficulties. Some experts say that the sudden shift is driven by Roh’s hidden political designs. Although President Roh said his heart seemed to unfreeze during his visit to Mokpo, the hearts of the people are freezing.

Although the governing Uri Party frequently speaks about hardships that the people have faced, they do not sound sincere at all. If they want to revive the livelihood of the people, they should promote corporate investment first. However, the Uri Party lawmakers are busy spilling cold water onto corporate investment and condemning business-friendly government policies. The main opposition Grand National Party also has been trapped by actionless populism without being able to draw up solutions to solve current economic problems, such as the real estate price hike.

Some 500 trillion won of floating investment is hovering over the real estate market. And its side effects will be grave. If President Roh and other politicians are too busy to address economic problems, at least they should reach an agreement not to meddle in the market and help businesses invest in the market without worries. This will create more jobs and promote consumption.