``Surprise'' was the word Finance Minister Yoon Jeung-hyun used to describe the economy's fastest growth in seven years over the past three months.
He may as well do so. The 2.9-percent expansion of the gross domestic product in the third quarter, coming on the heels of a 2.6-percent increase in the previous three months, was the clearest signal yet that Korea is finally getting out of the recession tunnel.
More important than these numbers were the ``contents'' of the recovery, which was fueled by private sector investment and consumption, replacing the first-phase engine of fiscal spending that began to flutter.
Critics may want to downplay the nation's fastest recovery among major economies as largely attributable to its unrestrained stimulus package composed of huge budget spending, bold tax breaks and drastic deregulations. Yet one shouldn't hold back due praise for the Lee administration's economic team for its set of preemptive measures.
What matters most now is where to go from here. The increase of capital spending by businesses still has a long way to go before reaching pre-crisis levels, considering the growth in industrial output was thanks mainly to their active adjustment of idle inventories in the previous quarter, one of the major factors behind the higher-than-expected ― or illusionary, as pessimists put it ― GDP expansion.
Illustrating best the hardly-revived investment mindset is the tantalizingly slow growth in new jobs. This, in turn, leads to a freeze in consumers' real purchasing power, which makes it all but impossible for Korea to attain the much-talked-about ``virtuous cycle'' of economic growth resulting in more jobs and leading to people's greater real income propelling still more growth. The meek ``endogenous strength of stability,'' when coupled with the end of stimulus policies in major economies, such as the United States and China, could throw the Korean economy into a double-dip in no time.
It is understandable, therefore, for President Lee and his economic team to repeatedly show caution about shifting to the ``exit strategy'' of monetary entrenchment through interest rate hikes. But they should closely watch as Washington and Beijing move to discontinue stimulus packages, although the wisdom of this is still subject to debate. In the worst-case scenario of stagnant purchasing power combining with asset bubbles, Koreans, especially middle-class and low-income families, will have to see their already serious debt levels go up dangerously without even getting a taste of recovery. As we have repeatedly said, the key of the government's economic policy should focus on how many jobs ― preferably more stable and high-paying jobs ― it can create.
Sadly, the present economic policy is far from this. One can easily distinguish which would produce more decent and future-oriented jobs between, for instance, large civil engineering works that dredge rivers and build motels and the renovation of large buildings to more energy-efficient structures.
The reason the previous two administrations received the disgraceful labels of ``lost decade'' was they resorted to makeshift employment programs such as short-term public services, resulting in income polarization. The Lee administration should do better than that with a long-term and more ``employment-friendly'' economic policy. It could start with strong enforcement of job-sharing programs for full-time workers of large business enterprises, state or private ― a major stumbling block to attaining more flexible job markets.
Whether the Lee administration is willing and able to do so will determine the prospects of the conservative party retaining power.