[Editorial] Shocking Drops in Growth Forecasts

The International Monetary Fund predicts Korea’s real economic growth will drop to minus four percent this year, the lowest among the Group of 20 countries and six percentage points less than the target set two months ago. The forecast reportedly does not reflect pumping priming measures announced recently, but is still very shocking.

According to the Korea Economic Research Institute, a drop of one-percentage point in the growth rate eliminates 70,000 jobs and raises the jobless rate 0.29 of a percentage point. The Korea Institute for Health and Social Affairs said a one-point decline produces 70,000 to 80,000 working poor and 220,000 credit defaulters. Negative economic growth is also adding to the people’s burden.

A government official said, “Though this year’s figures are shocking, we must note that Korea’s economic growth for next year will rebound to 4.2 percent, the highest in the world.” The government also notes that Singapore is expected to see minus growth of 4.9 percent and Taiwan minus four percent this year. Seoul intends to stem a vicious psychological cycle by instilling the Korean people with hope, but this is an incorrect approach. If negative growth comes this year, positive growth next year will have little meaning. Even if the economy grows 4.2 percent next year after contracting four percent this year, its size will remain at the prior year’s level. If growth reaches four percent next year, the economy will be smaller than last year. This situation is not something the government can brag about by saying it turned negative growth into positive.

With the export environment deteriorating daily, it is essential that the government mobilize drastic and prompt measures to shore up domestic consumption. It must use all fiscal and financial measures at its disposal to boost domestic demand and investment. Also needed is improvement of the tourist environment and streamlining of regulations to ensure that foreigners can visit Korea and spend here by taking advantage of the weak Korean currency. It is crucial that the government conduct more deregulation that could generate certain results without pumping in more money.

The business and political circles must also join these efforts. Companies should go all-out in business operations under a patriotic drive to sell every single product and reap every single dollar possible by aggressively developing niche markets at home and abroad. Politicians should stop hampering economic activities to pursue partisan interests, and should speedily pass all bills to help expedite recovery. It is time for everyone to join forces to raise the economic growth rate.