Park yet to deliver on growth pledges

President Park Geun-hye speaks during her visit to the Center for Creative Economy and Innovation in Daejeon, Thursday. / Yonhap

By Yoon Ja-young

Three years have passed since the inauguration of President Park Geun-hye. According to Cheong Wa Dae, the economy is one of the words most frequently mentioned by President Park, but there have been both achievements and failures in economic policies.

The biggest achievement that the government boasts of is the country’s high credit rating. Moody’s upgraded its rating for Korea to Aa2 last December, which is higher than the ratings for Japan and China.

“Amid the global economic slump, the Park administration prevented the economy from suffering a severe recession through aggressive stimulus measures,” said Lee Geun-tae, an economist at LG Economic Research Institute.

The government met huge obstacles for the economy each year, having to cope with the sinking of the ferry Sewol in 2014 and the outbreak of the Middle East Respiratory Syndrome (MERS) last year.

Stimulus packages enabled the economy to fare relatively well compared to other developed economies, but government debt snowballed to 595 trillion won last year from 425 trillion won in 2012.

Loss of growth is also worrisome. The economy grew 2.6 percent last year, down from 3.3 percent the previous year. Oh Jung-geun, a professor at Konkuk University, said economic indices aren’t positive.

“The Park administration had the right direction in the beginning,” he said, citing the creative economy and plans to enhance people’s happiness by pulling up the employment rate.

After three years, however, Oh points out diverse indices have deteriorated, including falling economic growth, rising unemployment and falling per capita income.

The administration resorted to the real estate market to boost the economy and deregulated mortgages while cutting interest rates.

It did stimulate the housing market with real estate transactions soaring to record-high last year, but it led to increasing household debt. This surpassed 1,200 trillion won, rising steeply from slightly over 1,000 trillion won recorded in 2013.

Economists pick the creative economy as an achievement of the Park administration.

“With creative economy centers set up around the country, the number of startups surpassed 30,000 and investment in these firms reached 2 trillion won. An increasing number of people are starting businesses. That’s positive,” Oh said.

However, he said that the government is failing to promote investment due to too much regulation. “Of course there were negative external factors such as a global recession, but it is undeniable that regulations are still obstructing investment,” he said, recommending that the government push ahead with structural reform and deregulation.

Lee said the administration should propose an agenda for the long-term.

“The Park administration did propose structural reforms as a measure to secure growth from a long-term perspective, but it seems to be still focusing on short-term stimuli,” Lee said.