Bolstering real economy crucial to heading off market woes
Korea's financial markets fell into a near panic Thursday. At stock markets, the benchmark Korea Composite Stock Price Index (KOSPI) dived 4.44 percent, and the tech-heavy Kosdaq index tumbled 5.37 percent. Foreign investors recorded net sales worth almost 500 billion won ($437 million).
The turmoil was due mainly to turbulence in the U.S. stock market. The Dow Jones Industrial sank 3.15 percent, and NASDAQ slumped 4.08 percent. Other Asian markets, such as Tokyo, Shanghai and Hong Kong, were also battered severely.
Shaking the U.S. markets was a recent series of bad economic news such as rises in the U.S. Treasury bond rates, crises in emerging economies, a prolonged trade friction between Washington and Beijing, and concerns about aggravating performances of U.S. tech companies.
Financial unrest is worrisome indeed because it can pose a burden on the real economy. Stock market turmoil freezes consumer sentiment further and blocks corporate investment. Financial authorities should enhance their monitoring of markets to calm investor anxiety and prevent participants from overreacting to market jitters.
More fundamentally, economic officials should make efforts to minimize the fallout of financial market instability on the real economy. The KOSPI slid for the eighth consecutive day Thursday, reflecting not only the present but future state of the economy. Think tanks here and abroad have begun recently to predict the Korean economy will go from bad to worse.
The International Monetary Fund (IMF) revised downward its growth projection for Korea from 3.0 percent to 2.8 percent this year. It also lowered next year's growth forecast from 2.9 percent to 2.6 percent. Statistics Korea's report shows the leading business index dropped for three months in a row.
All this explains why the Moon Jae-in administration ought to speed up the ongoing industrial restructuring and do more to create jobs. Temporary, fragmentary steps will go nowhere. The government should set up a comprehensive and elaborate policy package with a determination to map out a long-term blueprint for the Korean economy.
Nothing less will ease concerns about the economy and calm down jitters in the domestic financial markets.
Korea's financial markets fell into a near panic Thursday. At stock markets, the benchmark Korea Composite Stock Price Index (KOSPI) dived 4.44 percent, and the tech-heavy Kosdaq index tumbled 5.37 percent. Foreign investors recorded net sales worth almost 500 billion won ($437 million).
The turmoil was due mainly to turbulence in the U.S. stock market. The Dow Jones Industrial sank 3.15 percent, and NASDAQ slumped 4.08 percent. Other Asian markets, such as Tokyo, Shanghai and Hong Kong, were also battered severely.
Shaking the U.S. markets was a recent series of bad economic news such as rises in the U.S. Treasury bond rates, crises in emerging economies, a prolonged trade friction between Washington and Beijing, and concerns about aggravating performances of U.S. tech companies.
Financial unrest is worrisome indeed because it can pose a burden on the real economy. Stock market turmoil freezes consumer sentiment further and blocks corporate investment. Financial authorities should enhance their monitoring of markets to calm investor anxiety and prevent participants from overreacting to market jitters.
More fundamentally, economic officials should make efforts to minimize the fallout of financial market instability on the real economy. The KOSPI slid for the eighth consecutive day Thursday, reflecting not only the present but future state of the economy. Think tanks here and abroad have begun recently to predict the Korean economy will go from bad to worse.
The International Monetary Fund (IMF) revised downward its growth projection for Korea from 3.0 percent to 2.8 percent this year. It also lowered next year's growth forecast from 2.9 percent to 2.6 percent. Statistics Korea's report shows the leading business index dropped for three months in a row.
All this explains why the Moon Jae-in administration ought to speed up the ongoing industrial restructuring and do more to create jobs. Temporary, fragmentary steps will go nowhere. The government should set up a comprehensive and elaborate policy package with a determination to map out a long-term blueprint for the Korean economy.
Nothing less will ease concerns about the economy and calm down jitters in the domestic financial markets.
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