Gloomy Economic Figures Is President Roh's Confidence Still Valid?
Gloomy Economic Figures Is President Roh's Confidence Still Valid?
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  • 승인 2005.06.01 12:01
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One may not need official statistics to know the state of economy, but the April figures were worse than expected. The growth of industrial production slowed to 3.8 percent from 4.9 percent in March, and both coinciding and leading indexes reflecting expectations for the present and future economy turned downward. The capital spending and capacity utilization ratios fell from the previous month and the current account dropped into a deficit. In sum, the economy is dipping before it regains vigor. The only silver lining among the dark news was the continuous rise of wholesale and retail sales. But the domestic demand increases fell short of offsetting slowing export growth. Construction orders also climbed for two consecutive months, but its tempo slackened. Government economists appear anxious to stem the spread of the pessimism, saying the economy would bottom out soon. There is no need to become restless over one month's performance, but the government assurances of a turnaround in the second-half ring hollow. Most worrisome that the nation's balance of payments went into the red for the first time in 24 months. The Bank of Korea attributed it to extensive remittances of dividends by foreign investors but the sharp erosion in the surplus of the commodities trade also played a big part. So it is fortunate that overseas shipments regained double-digit increases in May. However, it is unclear how long it would continue, given exchange rate fluctuations and other adverse factors. A most telling sign of the economic trouble is a growth rate of 1.5 percent for the first quarter. It is unusual for the nation's economy to grow slower than that of the U.S. or Japan, economies that expanded by 3.5 percent and 5.3 percent, respectively. This means Korea fell into the double-dip trap, while other major economies are undergoing a soft patch. Deputy Prime Minister Han Duck-soo has finally acknowledged the initial growth goal of 5 percent may not be attainable. Han, also minister of finance and economy, still reaffirmed the government's adherence to the growth target. This sounds increasingly like wishful thinking, while President Roh Moohyun's confidence in economic recovery appears groundless. What makes economic players so concerned are the inconsistent and irrational government policies that seem to lack a sense of responsibility. The large investment projects, both here and abroad, are also turning into massive fiascos due to inexperience and irregularities. President Roh has reiterated again and again there would be no economic stimulus through reviving the real estate boom. Then the government should hurry to implement other actions, such as frontloading the budget and instituting tax cuts. If the economy is allowed drift still further, Korea will enter into a Japan-like lost decade of stagnation. The nation may have done so already.

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