The government will have to be sensitive and consistent in the way it carries out policy if it is going to make sure the recovery lasts. It needs to focus on seeing to it that investment comes back to life instead of trying artificial stimulation measures. It will be asked to do many things, but more than anything else it needs to approach removing obstacles to investment from the perspective of business. For example, regulations that unnecessarily give power to bureaucrats and those that negatively influence corporate activity without reason must be liberalized decisively.
There are still many unstable factors that could disrupt the economy. Oil prices remain high. One major variable is the fact that globally the days of low interests are coming to an end. It is very possible that as low interest rates come to an end the bubble it had created could become a burden for the economy. That could be a major risk factor for Korea, where real estate prices took a big jump. If the bubble gets any worse the country could experience something similar to the ten-year complex slump that Japan has found itself in. For mid-sized companies that have been barely hanging on to life rising interest rates would be like taking a direct hit. They may need restructuring, but the shock of a sudden sequence of bankruptcy cases needs to be minimized. These are all issues that demand government attention in order to facilitate changes in the quality of the economy and see to it that the economy enjoys a soft landing.
Since the nineties, periods of economic recovery have been characterized by economic disparity. Even when the indicators are good, the economy as most directly felt by mid-sized companies and the common people has not followed suit. The same trend must not be allowed to continue. If the warm air is not circulating properly through the heating system, the system needs to be fixed. The same goes for our economy. It is why the government and the conglomerates all need to think about mutual prosperity during this period of recovery. Conglomerate unions and the rest of the labor movement urgently need to cooperate to that end.
The Hankyoreh, 2 January 2006.
[Translations by Seoul Selection]
