Service sector productivity went up 5.4 percent in September compared to the same month last year. Encouraging indicators can also be found in the Bank of Korea's recent announcement that third quarter growth was 4.4 percent, and that industrial production went up 7.2 percent in September. BOK's growth rate announcement for the third quarter is actually a preliminary estimate. The figures for July and August have been determined, but growth rate was calculated based on expected figures for September. However, the trends in industrial production and service sector productivity for September show that in September as well the movement towards an economic recovery continued, and that is of no small significance.
Upon close examination, however, one finds unstable factors. There should be no need to actually try and underestimate the significance the trends as seen in recent indicators, but you still can't be optimistic about the situation. International variables such as the cost of oil and unsure US economic trends are one thing, and then domestic investment shrank in September. Despite the overall recovery in service sector productivity, wholesale and retail trade increased only 2.1 percent, less than the 4.2 percent of August. The poor performance in both sectors so key to domestic consumption makes it hard to say the recovery will be sustained. The overall indicators are positive, but there isn't enough substance.
It is a sensitive situation, one in which the economy could regress unless the country works hard at encouraging investment, since it is way behind the trend towards recovery, and at easing the minds of those who move the economy. Unnecessary regulations that block investment need to be relaxed, but of immediate urgency is resolving issues on the economic agenda such as the selection of "innovative cities," resolving the question of permitting the building of factories in the greater capital region and the potential for linking that to the selection of "innovative cities," and legislation related to real estate policy. Companies and others who move the economy would then be able to decide on clear courses of action. Much about economic trends is determined by psychology. For that reason the politicians must move away from the wasteful conflict and fighting that fosters anxiety and political and social uncertainty.
The Hankyoreh, 1 November 2005.
[Translations by Seoul Selection]
[Editorial] Resolve Economic Issues to Eradicate Uncertainties |
