By Yoon Ja-young
Staff Reporter
Six months have passed since the inauguration of President Lee Myung-bak. The President, who won a landslide victory last December on people's hopes that he could save the economy, has had a hard time during the last six months due to internal and external negative factors. Slowly recovering from the chaotic disruption, Lee is renewing the drive behind his plans for the economy.
The administration has been unable to execute much of its economic policies because of fierce protests following the resumption of U.S. beef imports. People held candlelit protests over concerns for safety, and Lee's approval rating nose-dived to below 20 percent.
Though the fear of the U.S. beef has subdued, people's negative sentiment toward the President's policies are hindering the administration.
The privatization of the public sector, one of Lee's most ambitious plans, has also faced a strong backlash from the public as people have doubt about its motivation.
Consequently, the reform plan foundered ― around 60 to 70 public enterprises were set for privatization in the first place, but the recently announced plans showed only 27.
The President also gave up on his Grand Canal plan, a mega civil engineering project aimed at boosting the economy.
External negatives are adding to President Lee's problems, who started his term amid global financial market turmoil.
Consumer prices rose nearly 6 percent in July, for the first time since the Asian Financial Crisis a decade ago, due to global inflation following oil price hikes.
President Lee originally came up with the ambitious 747 pledge ― achieving seven percent annual economic growth, $40,000 per capita income, and becoming the world's seventh largest economy ― but nobody now thinks this can be achieved. The government lowered its economic growth outlook to below 5 percent, from over 6 percent, and its job creation target was cut to 200,000 from 350,000. Even these targets, however, will not be easy to achieve.
The U.S. and other developed economies are slowing down, and China, Korea's major trade partner, is sliding despite the Olympics.
With external negatives still haunting the administration, policymakers also made mistakes. Most notable was their foreign exchange rate policy. An obsession with high economic growth made them ignore oil price hikes and push for a weak won to boost exports. However, this only made consumer prices rise further. The dollar, which traded at 949.9 won at the time of Lee's inauguration, soared by over 10 percent.
President Lee, however, is slowly recovering his leadership, and renewing his drive to save the economy. Only a few are continuing the candlelit protests now, and opponents are slowing down their attacks on Lee.
His main idea of boosting the economy through tax cuts and deregulation is surging ahead.
As a former CEO of the country's largest construction company, the president is also planning to boost the real estate market to help the economy recover. The recent stabilization of real estate prices in some areas has also added to the motivation for deregulation.