Korea Under Double Squeeze
As Presidential candidate, Lee Myung-bak promised a lot of things, the highlights of which were his economic revival plan. His so-called ``747'' plan, promising an annual growth of 7 percent; an average individual income of $40,000; and the nation's economy becoming the world's No. 7, captured the imagination of voters, who, dissatisfied with the previous government's distribution-over-growth policy, turned out to render massive support for the former CEO of Hyundai Engineering & Construction in the Dec. 19, 2007 presidential election.
Though not entirely his fault, Lee is facing the prospect of folding his promises even before he has made a serious attempt to go with his pledges.
Oil prices are galloping with Paul Krugman and Goldman Sachs forecasting oil will reach $200 per barrel before the year's end. The economy of the nation, which depends heavily on imported oil for its energy needs, is reeling, adding to the current account deficit. At the same time, Lee's economy team, led by Kang Man-soo, minister of strategy and finance, repeatedly downscaled its growth targets, while making conflicting signals on its macroeconomic policies to add to the uncertainty.
Coming on top of this was a decision by the Lee administration to open up its markets to U.S. beef, which triggered the biggest act of civil disobedience in two decades. The beef issue has disillusioned the public, who backed Lee in the election, sending his popularity down to below 20 percent.
Lee's political base is also in disarray, with his top aide comparing the economic situation with that before the 1997 financial crisis.
Now, President Lee is trying to make a fresh start, giving tax rebates to the tune of $10 billion, reorganizing economic policy in a way to meet mounting global demands and appealing to the public to brace for a harder time. It still remains to be seen whether Lee's fresh start will gain traction. ― ED.