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Independent economist Andy Xie |
By Kim Jae-won
Staff Reporter
A noted global economist warned Tuesday that Seoul’s overheating property market could hamper economic growth.
At an economic conference hosted by Hana Financial Group in Seoul, Andy Xie, an independent economist who predicted the 1997 to 98 Asian financial crisis, stressed that Korea needs to cool off the real estate market in the capital.
``Property prices rose much more than the economy for a decade. Surplus financial capital flowed into the market. When interest rates are low, it is okay but if serious inflation follows, the economy could crash,’’ he said.
The former Morgan Stanley Asia Pacific chief economist also suggested companies focus on boosting their brand values when investing in China.
Citing Samsung as a good model, he said, ``Korean companies should focus on brand building and technology. Samsung has succeeded beyond my expectation. It is one of the biggest foreign companies in China. Its experience in marketing should be shared with other Korean companies.’’
Regarding the global economy, Xie warned that the world could undergo another crisis, ``Next year, will be okay but, the bubble will burst the year after next. It’s possible we’ll have another crisis in two years.’’
He argued that the main problem was excessive stimulus policies by governments around the world.
``The main issue in the world is governments supporting economies. Government stimulus during a crisis is acceptable, but using this method for growth is a problem. The main problem is structure. It causes mismatches between surplus and demand. Currently China’s consumption is too low, and U.S. consumption is too high.’’
He said the global economy will not grow quite as much as expected next year.
``Next year, the world economy will grow 2 or 3 percent, not 4 percent. The U.S. may grow 2 percent, and China will grow 7 percent.’’
He said that the U.S. government has focused only on short-term economic policy. ``Obama’s perspective is no more than one year. Nobody cares about the long term.’’
Xie expects China’s economy will have an adjustment period in 2012, and said Beijing should give money back to its citizens to boost their purchasing power. ``Their economy will be much healthier. Let’s see how China reacts.’’
shosta@koreatimes.co.kr
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