The economy is sinking deeper and deeper into a quagmire. Almost all industrial indices are plummeting, as shown by Statistics Korea's report on the trends of industry activity, released Wednesday.
Industrial output in September fell 1.3 percent from August to hit the lowest level in five-and-a-half years. Consumption, which regained vigor in July and August, reversed to a downturn of 2.2 percent in September.
Even more worrisome, the cyclical composite business index ― a barometer of current economic trends ― fell for the sixth consecutive month since April. That is more than alarming given most analysts say the economy enters into a recession if the index drops six months in a row. The state statistics agency also acknowledged the seriousness of the situation, saying, “It can't be denied that the economy is not in good condition.”
The only silver lining in the dark economic cloud was the investment into plants and equipment, which rose 2.2 percent month-on-month. Considering most of this was for facility buildup by semiconductor makers, however, it only illustrated the vulnerability of the economy that unduly relies on a few sectors.
Economic think tanks, here and abroad, are diagnosing that the Korean economy is showing signs of a severe slump. President Moon Jae-in's economic team, however, reiterates the nation's economic fundamentals are sound enough.
Top economic officials, including Economy and Finance Minister Kim Dong-yeon and Fair Trade Commission Chairman Kim Sang-jo, call for waiting longer before judging the economic performance of the incumbent administration. These policymakers can hardly be more irresponsible, regarding the people's sufferings from economic setbacks as someone else's business.
The current economic situation is highly likely to combine with financial market turmoil to develop into an acute crisis. Economic officials must bear in mind that the situation will only worsen unless they overhaul industrial structures through bold restructuring and labor reform.
The quickest and most effective solution is to break away from the current economic policy focusing on income-led growth to dispel market uncertainty.