Radical policy changes needed to put brakes on symptoms of slump
The country's current account swung to a big deficit in April from a surplus in March due largely to a sharp decline in exports caused by the coronavirus pandemic. The country posted a $3.12 billion current account deficit in April, compared with a $5.96 billion surplus in March. The shortfall was the biggest since January 2011 when South Korea suffered a $3.16 billion current account deficit. The deficit also came one year after the country posted its first current account deficit in 84 months in April 2019.
The Bank of Korea attributed April's big deficit to a sharp fall in the goods account surplus, which slipped to $820 million from a $6.66 billion surplus in March and a $5.61 billion surplus in April 2019. Exports were hit hard by depressed economies in the United States and European Union where the spread of the coronavirus intensified in April.
The central bank predicts a current account surplus in May, stating that conditions for trade have improved. It also expects the country to post a $17 billion surplus in the first half of the year, but this seems overly optimistic. To record a surplus of this size in the six-month period, South Korea has to post a surplus of over $6.5 billion in May and June. But given that the COVID-19 pandemic continues unabated, the goal seems unattainable amid sluggish exports predicted for the rest of the year. Moreover, a growing number of companies are being driven into dire circumstances.
As the fallout from the pandemic spreads, the country is struggling with job losses, shrinking income and consumption and tumbling growth. It is imperative therefore to put the brakes on these slump symptoms through radical policy changes. What is most urgent, among other things, is for the Moon Jae-in administration to drop its anti-corporate policies. Otherwise, any fiscal policy will prove useless in nursing the economy back to health.
The country's current account swung to a big deficit in April from a surplus in March due largely to a sharp decline in exports caused by the coronavirus pandemic. The country posted a $3.12 billion current account deficit in April, compared with a $5.96 billion surplus in March. The shortfall was the biggest since January 2011 when South Korea suffered a $3.16 billion current account deficit. The deficit also came one year after the country posted its first current account deficit in 84 months in April 2019.
The Bank of Korea attributed April's big deficit to a sharp fall in the goods account surplus, which slipped to $820 million from a $6.66 billion surplus in March and a $5.61 billion surplus in April 2019. Exports were hit hard by depressed economies in the United States and European Union where the spread of the coronavirus intensified in April.
The central bank predicts a current account surplus in May, stating that conditions for trade have improved. It also expects the country to post a $17 billion surplus in the first half of the year, but this seems overly optimistic. To record a surplus of this size in the six-month period, South Korea has to post a surplus of over $6.5 billion in May and June. But given that the COVID-19 pandemic continues unabated, the goal seems unattainable amid sluggish exports predicted for the rest of the year. Moreover, a growing number of companies are being driven into dire circumstances.
As the fallout from the pandemic spreads, the country is struggling with job losses, shrinking income and consumption and tumbling growth. It is imperative therefore to put the brakes on these slump symptoms through radical policy changes. What is most urgent, among other things, is for the Moon Jae-in administration to drop its anti-corporate policies. Otherwise, any fiscal policy will prove useless in nursing the economy back to health.
![[ANALYSIS] Tesla, BYD's price cuts unnerve LGES, Samsung, SK](https://img.koreatimes.co.kr/upload/thumbnailV2/b1cf8ba68d474cb69352bfe7ea9d14f0.jpg/dims/resize/178/optimize)
![[INTERVIEW] How ATEEZ achieved worldwide success](https://img.koreatimes.co.kr/upload/thumbnailV2/c7723b56dde94eb4b260950d368fe8fb.jpg/dims/resize/178/optimize)
