Time to go all-out to boost sagging economy
No one likes to see the country's economic growth forecast go down. But on Wednesday, the government lowered this year's projection by 0.2 percentage points to between 2.4 percent and 2.5 percent. This downward revision was inevitable due to a continued decline in exports and investment.
Yet it is still doubtful as to whether the Moon Jae-in administration has correctly assessed the current economic situation, which some critics say faces more difficulties than previously thought. In other words, the government appears to be harboring wishful thinking that the economy will perform better than the reality.
It goes without saying that a precise diagnosis is crucial to finding a cure. That is, it is important to portray the real picture of the slumping economy. Without it Moon's economic team cannot have a remedy for success. In this sense, the government seems to be reluctant to cut its growth outlook by a bigger margin.
Of course, maintaining the growth target at a higher level to a certain degree will help people have hope that they will be better off soon. However, providing a misguided outlook could lead to policy failures and at the worst economic woes.
We have to raise this issue because the President and his officials have so far argued that Moon's signature income-led growth policy will make tangible progress in the "latter half of the year or early next year." They began to make the argument in 2018 when they failed to meet any intended goal of creating more jobs, bringing higher wages and boosting consumption and investment, thereby raising economic growth.
In a nutshell, the Moon administration still lacks a sense of crisis. It is giving the impression that it is only trying to justify its ill-timed policies without acknowledging policy blunders. The revised outlook is also raising a question: Will Moon and his policymakers wake up to the aggravating economic conditions? The answer is negative rather than positive.
Last month, global credit appraiser Fitch Ratings lowered its 2019 growth outlook for the Korean economy to 2 percent from its earlier forecast of 2.5 percent. In May, global investment bank Goldman Sachs slashed the country's growth projection to 2.1 percent from 2.3 percent. Other institutions and think tanks have already offered a similar gloomy outlook.
In fact, the real problem is that the Korean economy has been increasingly losing it growth momentum. This is now being further aggravated by adverse external factors such as the global economic downturn and the U.S.-China trade war. As a result, exports, the nation's main economic driver, have been on a seven-month downward march. Facility investment and domestic demand have also become sluggish.
Japan's decision to restrict its export of three key materials to Korea could deal a severe blow to the production of display panels and semiconductors which account for more than 20 percent of Korean exports. That's why the government should make all-out efforts to adopt new policies that can help revive the growth momentum by promoting deregulation, innovation and entrepreneurship.
No one likes to see the country's economic growth forecast go down. But on Wednesday, the government lowered this year's projection by 0.2 percentage points to between 2.4 percent and 2.5 percent. This downward revision was inevitable due to a continued decline in exports and investment.
Yet it is still doubtful as to whether the Moon Jae-in administration has correctly assessed the current economic situation, which some critics say faces more difficulties than previously thought. In other words, the government appears to be harboring wishful thinking that the economy will perform better than the reality.
It goes without saying that a precise diagnosis is crucial to finding a cure. That is, it is important to portray the real picture of the slumping economy. Without it Moon's economic team cannot have a remedy for success. In this sense, the government seems to be reluctant to cut its growth outlook by a bigger margin.
Of course, maintaining the growth target at a higher level to a certain degree will help people have hope that they will be better off soon. However, providing a misguided outlook could lead to policy failures and at the worst economic woes.
We have to raise this issue because the President and his officials have so far argued that Moon's signature income-led growth policy will make tangible progress in the "latter half of the year or early next year." They began to make the argument in 2018 when they failed to meet any intended goal of creating more jobs, bringing higher wages and boosting consumption and investment, thereby raising economic growth.
In a nutshell, the Moon administration still lacks a sense of crisis. It is giving the impression that it is only trying to justify its ill-timed policies without acknowledging policy blunders. The revised outlook is also raising a question: Will Moon and his policymakers wake up to the aggravating economic conditions? The answer is negative rather than positive.
Last month, global credit appraiser Fitch Ratings lowered its 2019 growth outlook for the Korean economy to 2 percent from its earlier forecast of 2.5 percent. In May, global investment bank Goldman Sachs slashed the country's growth projection to 2.1 percent from 2.3 percent. Other institutions and think tanks have already offered a similar gloomy outlook.
In fact, the real problem is that the Korean economy has been increasingly losing it growth momentum. This is now being further aggravated by adverse external factors such as the global economic downturn and the U.S.-China trade war. As a result, exports, the nation's main economic driver, have been on a seven-month downward march. Facility investment and domestic demand have also become sluggish.
Japan's decision to restrict its export of three key materials to Korea could deal a severe blow to the production of display panels and semiconductors which account for more than 20 percent of Korean exports. That's why the government should make all-out efforts to adopt new policies that can help revive the growth momentum by promoting deregulation, innovation and entrepreneurship.
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