Lowering Economic Growth Forecasts
Lowering Economic Growth Forecasts
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  • 승인 2005.10.01 12:01
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Government Should Bear Responsibility for Economic Downturn With only three months left to go until the end of this year, the government again lowered economic growth for the year to 3.8 percent from the 4 percent level, which had already been revised from the 5 percent range. The government cited two factors for lowering the economic outlook - steep oil prices in international markets and the strong value of the won against the greenback. The government's excuse sounds plausible in consideration of our complete reliance on imports of oil for energy and our economy's heavy dependency on exports, which are swayed by the exchange rate of the won against the U.S. dollar. However, the two factors can't be sufficient enough to convince the general public of the government's decision to lower the economic growth forecast. Steady or bullish economic advances for the United States, Japan, China and India can't be explained as they are also suffering from high oil prices. On the other hand, an increase in the value of the won against the greenback ought to stimulate domestic consumption as it lowers the prices of foreign products, although it decreases exports of local goods. But the reality belies the general concept as domestic consumption continues to stay in the doldrums while exports are still brisk, though their increase has substantially slowed down. Most people believe that the main culprit in the economic downturn is the government's mismanagement of the economy, the outcome of its policy focused on distribution instead of growth and its control of large corporations. Needless to say, an economic recovery will be impossible unless family-owned business conglomerates expand their facility investments and pursue new projects. But they have been forced to keep their passivity because of the government's distrust of chaebol and various restrictions on corporate activities. To make matters worse, looming political turmoil over a revision of the parliamentary election system is likely to further impede the economy. Against this background, the government needs to lift or drastically ease restrictions on corporate activities as quickly as possible to encourage large enterprises to actively do business. Last but not least, President Roh Moo-hyun has to stop his political venture once and for all to prevent the nation from being plunged into a political conflict between the ruling Uri Party and the main opposition Grand National Party. Instead, Roh should concentrate efforts on reviving the economy in cooperation with the GNP, finally respecting the people's desperate wishes.

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