By Choi Sung-jin
A who’s who of economic academia in Korea have cited three problems -- the aging population, sluggish investment and failed restructuring -- as the causes of the nation’s economic slowdown.
Gallup Korea released the results of its survey of 55 economic experts at a forum Thursday at the National Assembly Budget Office to celebrate the opening of the 20th legislature.
Asked to name domestic and foreign factors that pull down Korea’s economic growth, 30.9 percent cited demographic changes of population aging and the low birthrate, followed by slowing business investment (25.5 percent), and bungled restructuring and a failure to find a new growth engine (18.2 percent).
As external factors, 60 percent pointed to the global economic slump. All the respondents said the nation would remain in the doldrums of sluggish growth, the survey showed.
Kim Joon-kyung, president of the Korea Development Institute, noted that Korea’s economic growth has shown a downward trend over the past two decades.
“Since the 2008 global financial crisis, the government has failed to let failing firms sink but kept them afloat with low interest rates and policy loans,” he said. “The ongoing restructuring of the shipbuilding industry is an important test of the government’s will, and officials should step off on the right foot.”
Yu Byoung-gyu, president of the Korea Institute for Industrial Economics and Trade, forecast this year’s economy would be relatively more robust in the first half and languid in the second.
“Last year, Korea’s exports fell 8 percent from 2014, and those by the nation’s 12 key industries even dropped at a steeper rate of 10 percent,” he said. “Domestic and international factors are expected to aggravate in the latter part of this year, too, repeating last year’s pattern of relative vigor in the first six months followed by languor in the last six.”
Park Hyung-soo, president of the Korea Institute of Public Finance, said the national economy had entered a downturn, with last year-end the recent peak. “As Korea is highly likely to follow the Japanese experience of prolonged slow growth, the nation’s industry should do all it can to shift from a fast follower to a first mover,” Park said.
Phang Ha-nam, president of the Korea Labor Institute, said the link between growth and employment has weakened. “In order to create a larger number of decent jobs, it is important to resolve the rigidity and inequality in labor markets,” Phang said.
There also were demands for regulatory reforms.
“Some foreigners say Korea appears to be the competing ground of policies, pointing out too many government policies,” said Kim Jun-ki, chief of the National Assembly Budget Office. “The government should try to enhance the efficacy of its policies through concentrating on a selected few.”
A commentator representing the business community complained about ongoing investigations of large companies. “The economy hates uncertainty most,” he said. “If some government officials call for reinvigorating investment while others dig into businesses, companies can hardly make proper investments.”