By Michael Ha
Staff Reporter
President Lee Myung-bak's growth-oriented economic vision, dubbed ``MBnomics,'' needs to be readjusted in light of inflationary pressures and current account deficits, according to economists Monday.
It's been just over 100 days since President Lee began implementing his economic vision. But some economists say the President should not put too much emphasis on economic growth at the expense of price stability. President Lee's economic vision includes minimizing regulations, focusing on privatization, creating a business-friendly environment and reducing the tax burden on businesses. But some critics have argued that Lee favors the chaebol, Korean conglomerates, over smaller businesses.
The MBnomics also offers the ``747 plan,'' which aims to achieve 7 percent economic growth, increase per capita income to $40,000 within a decade and make the nation the seventh largest economy in the world.
But Song Tae-jung, a research fellow at LG Economic Research Institute, told The Korea Times that he sees ``quite a few problems'' with the administration's economic policies.
``First, I think the government is putting too much emphasis on growth at the expense of economic stability. I think the administration should take a long-term view on economic growth and not try to rush it,'' he said.
``What's more important now is price stabilization and fixing the current account deficit. I think the administration should focus on these areas.''
He also said there are external factors that are beyond President Lee's control, such as rising prices of raw materials around the world. ``Combined with a weak local currency, it's been contributing to rising prices and inflationary pressures. The consumer price index jumped 4.9 percent last month from a year earlier. The goal for price stabilization was 3.5 percent. But the actual number was much higher,'' he said.
``So at this point, the biggest task is maintaining economic and price stability. First of all, maintaining a high exchange rate is not the right policy. I think what's important is correcting the exchange rate that has overshot in the past few months.''
He said there is a sense of uncertainty and that some people are saying they don't know which direction the government is headed.
``The administration is also giving the impression it only cares about the conglomerates. But in fact, I know that President Lee also wants to revitalize small businesses. He is not doing enough to communicate to the public that he is in fact serious about helping small and medium-sized companies. So in that respect, I think President Lee has been portrayed unfairly.''
Song advised President Lee to reprioritize his economic policies. ``He needs to understand he can't accomplish everything. He can only go about accomplishing a couple of major goals at a time with regard to his economic plans.''
He added, ``In regard to growth versus price stability, at this point in the Korean economy, he should choose price stability. His administration needs to do a better job of diagnosing the current situation and problems. I think the Lee administration is in a hurry to show tangible economic improvements. But he needs to get away from that mentality and take stock of the situation."
Kwon Soon-woo, a research fellow at Samsung Economic Research Institute, said there is a sense that ``the administration doesn't really have a specific, coherent set of policies put together and that it's running around in confusion.''
``But you have to remember that it's only been 100 days and we just have to give him more time. But the administration doesn't really have the time to look back and make adjustments because of other the crisis it's facing. So the situation looks pretty serious.''
Kwon said that the criticism that he hears is ``not so much about the MBnomics itself but the implementation of concrete policy procedures. There is no problem with the big picture, per se. But there are some missteps in implementing the economic vision. That's the problem.''