Growth Rates Padded for Political Purposes
By Kim Yoo-chul
Staff Reporter
The outgoing head of a government-funded think tank has accused President Lee Myung-bak and his economic team of presenting politically-motivated misguidance in economic growth rates.
"Researchers or heads of government-backed institutes, who are passive and play an active role as trumpeters in delivering government policies should be eliminated," Lee Dong-gul, chief of the Korea Institute of Finance (KIF), said in an e-mailed farewell message to researchers.
Lee offered to resign Wednesday. Officials said he was forced to resign for his straightforward wording style and hawkish stance against government policies.
"Under the current government, researchers are just a 'mouth tank' not a 'think tank.' The government was seeking reasons for its policy failures from passive PR efforts," Lee said.
"The forecast of economic growth rates also fell under the hands of a government-organized political play," he added.
Lee's remarks came following global investment banks lowering of the nation's growth projections for the year.
Korea's economy has been losing ground so fast that some economists see it heading into its first recession since the 1997-1998 Asian financial crisis, while its banks, plagued by a persistent dollar funding squeeze, have turned off the taps for borrowers.
Nine major global investment banks said the economy may grow an average of 0.8 percent considering the country's slowing exports, higher unemployment and anemic consumption.
Merrill Lynch turned sharply pessimistic about the national economy, predicting it will shrink 1.2 percent. In late November 2008, the bank had predicted a 1.5 percent expansion.
Switzerland-based UBS maintained its prediction of a 3 percent contraction, while Goldman Sachs lowered its growth outlook to 1.8 percent from 3.1 percent.
A new Deutsche Bank forecast predicted a 0.2 percent expansion.
However, the government persisted in stating that it could attain growth of 3 percent, though most key economic data was heading south. Manufacturers' sentiment towards business conditions in January fell to a new record low.
The nation's central bank said the national economy shrank a seasonally adjusted 5.6 percent in the fourth quarter of 2008 from the previous three months, far more than expected and the biggest fall in nearly 11 year.
"The government is easing regulations for conglomerates allowing them to own banks. But the measure is just a tactic to eventually hand over banks to conglomerates," Lee said.
"The government regards research institutes' 'independence' as a one-time luxury. Now it is time to leave," Lee said.