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(EDITORIAL from Korea Times on Oct. 27)

Editorials from Korean Dailies 09:37 October 27, 2018

Economy losing steam

Policymakers should put top priority on growth recovery

Concern is growing that the Korean economy is rapidly losing steam because it has continued to perform poorly this year. According to the Bank of Korea (BOK), gross domestic product (GDP) grew a meager 0.6 percent in the third quarter from the previous quarter.

More people are sensing an economic crisis as the economy failed to rebound after expanding 1 percent in the first quarter and 0.6 percent in the second quarter. It will be difficult for the country to achieve the government's 2.9 percent growth projection for 2018.

The BOK cited sagging facility and construction investment as the reason for the sluggish growth rate. Facility investment fell 4.7 percent quarter-on-quarter ― its worst in five years. Construction investment dived 6.4 percent ― the biggest drop in 20 years.

Some economists and industrial observers are painting a gloomier picture, saying the economy may suffer a meltdown similar to the 1997 Asian financial crisis if the country does not take radical steps. No one can rule out the possibility of Korea plunging into another catastrophe.

What is more worrisome is that the Moon Jae-in government is taking only expedient measures to cope with downside risks and reinvigorate the economy. In fact, economic policymakers have so far been too engrossed in pitching President Moon's much-avowed policy of income-led growth.

The policymakers have refused to acknowledge their failure to create more jobs and bring higher incomes to the people, especially the poor working class. Despite these failures, the policymakers have repeatedly pledged to stick to the income-led growth policy, while turning a blind eye to the worsening economic situation.

Still the liberal government is trying to inject more state money to finance the ill-conceived policy of creating temporary jobs in the public sector.

The government should realize that such a move will only waste taxpayers' money without achieving inclusive growth.

The policymakers should overhaul their economic policies and take fundamental and comprehensive measures to regain economic vitality and beef up the nation's growth potential. Otherwise, they cannot prevent the economy from sliding further into trouble and they will not get it back on the right track.

More than anything, policymakers and politicians should work out an action plan before it is too late. The Korean economy faces mounting challenges such as the worsening trade war between the U.S. and China, rising crude oil prices, higher interest rates in the U.S. and tumbling stock markets.

It is time to push for drastic structural reforms to overcome the weaknesses of the economy and improve the competitiveness of Korea Inc. The authorities also ought to map out radical measures to encourage corporate investment and stimulate domestic demand. They should put top priority on reviving the economy.

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