Upbeat outlook

People want to enjoy benefits of recovery

A set of indicators shows that the Korean economy is already back to normal and headed for a stronger-than-expected expansion this year. It is good to hear that economic activities have reclaimed their past glorious records. Now, what's important is how to keep the growth momentum and usher in a new era of economic renaissance.

One of the most outstanding performances is the nation's gross domestic product (GDP), which increased 7.8 percent in the first three months of this year. The figure is the highest in more than seven years, according to the Bank of Korea (BOK). Such growth has not been witnessed since the last quarter of 2002 when the economy jumped by 8.1 percent.

Equally upbeat news is that manufacturers' business confidence rose to a nearly eight-year high. On Thursday, the central bank said its business survey index measuring the sentiment of manufacturing firms reached 103 last month, surpassing the benchmark 100 for the first time since the second quarter of 2002.

The Federation of Korean Industries also said that overall business sentiment was estimated at 113.4 for May, marking a gain for three months in a row. This means that more and more corporations have brighter prospects for their business activities, helped by a faster-than-anticipated economic recovery this year. Their improving confidence is also a direct reflection of their higher corporate earnings backed by an export upsurge.

The BOK has already raised its 2010 growth projection to 5.2 percent from its earlier prediction of 4.6 percent. The Lee Myung-bak administration is also confident that the economy will grow at least 5 percent, saying that Korea will be one of the fastest-recovering economies in the world. Policymakers need to make concerted efforts to put the promising expectations into action.

Despite the rosy picture, most individuals are not sure that they can pluck the fruits of the ongoing economic resuscitation. What is the reason for their lack of confidence? It's because they have often been alienated from the profit sharing process. In other words, they have not been allowed to enjoy the real benefits from the economic expansion, particularly since the outbreak of the 1997-98 Asian financial crisis.

Everyone knows that the nation has seen the rich-poor gap widening since the turmoil. A large portion of the middle class has been relegated to lower income brackets, helping divide the nation into a society that is dominated by the wealthy 20 percent while the 80 percent majority becomes poor. This unintended consequence was unquestionably caused by the concentration of wealth of a small number of people.

One of the underlying problems is the failure to create jobs. The scarcer the job opportunities get, the poorer people become. More than 5 million people, or 30 percent of the nation's workforce, are still working part-time and as day laborers subjected to discrimination against them in terms of wages, working conditions and other treatment. Thus, policymakers and employers should focus more on generating more jobs so that people can have a fairer share of the dividends from the recovery.

For this, the government is required to increase domestic demand by strengthening the services sector. This policy is also indispensable in reducing the nation's heavy dependence on exports. Besides, the Lee administration should no longer delay its job of starting an exit plan to unwind the stimulus packages as the economy is back on the right track. Of course, it must strive to avoid any remaining downside risks such as a double-dip recession, asset bubbles and fallout from the debt crisis rocking Greece and other European countries.