Is economic recovery in the offing?

Experts refute gov't blind optimism

By Lee Min-hyung

The local economy is unlikely to regain its vigor in 2020, as recent economic indexes propping up the rosy outlook are nothing more than statistical base effects, experts said Monday.

The figures, released by Statistics Korea, showed the nation's industrial growth in production, consumption and investment in November.

Specifically, the index on industrial production growth increased 0.4 percent last month, compared to the month before. Figures showing retail sales and facilities investment also grew by 3 percent and 1.1 percent, respectively, during the same period, according to data.

Economists here, however, voiced their consensus the figures are too marginal to be recognized as signs of a local economic rebound in 2020.

“The level of growth is too slight to say that this can be seen as an indicator for a near-term economic rebound here,” Yonsei University economist Sung Tae-yoon said.

He expected the economy to continue to suffer the “L-shaped recession” in 2020.

“Considering the statistical base effects, such economic indexes will likely improve next year,” he said.

But the public will not be able to actually feel economic vitality, as the statistical figures in 2020 only show the level of growth, compared to those in 2019 when the economy has been suffering a year-long slump, according to the economist.

Kim Sang-bong, another economist at Hansung University, also underlined the need to be aware of “over-interpretation” of the statistics.

“The so-called triple growth does not last in a stable manner,” he said.

In this October, the three monthly indexes ― showing growth for production, consumption and investment ― registered negative numbers.

“Starting this year, the figures have fluctuated all the time, so it is hard to say that the growth in November is an indicator for a local economic rebound,” he said.

The professor also remained negative over the short-term economic recovery here.

“In 2020, a series of economic indexes will likely take a turn for the better on the base effect and the government's plan to expand fiscal budgets to rev up the sagging economy,” he said.

The government announced its decision recently to invest 100 trillion won ($86.46 billion) in 2020 to revitalize the economy. The capital will be used for private companies as well as public organizations.

“The expansionary fiscal policy will help raise statistical figures next year, but it still remains questionable over whether the economy will actively be able to recover,” he said.

The overall negative outlook, however, stands in contrast to the government's confidence in the potential economic rebound in 2020.

Deputy Prime Minister and Finance Minister Hong Nam-ki said the government remains confident that positive momentum will be shaped for the local economic recovery next year.

“The economy will definitely bounce back next year,” he said Monday in a year-end press conference. “I am not talking the talk from my own confidence. A series of global indexes from institutions, such as the OECD, share such a similar positive momentum.”