Warnings over economy

Alarm bells are ringing loud for the economy at a time when the country is mired in a scandal involving the newly appointed justice minister, Cho Kuk.

Bank of Korea (BOK) Gov. Lee Ju-yeol has expressed skepticism about Asia’s fourth-largest economy, saying, “It’s not easy to meet the 2.2 percent growth target for this year.” Meeting the press Friday, Lee said, “It has been two months since the central bank offered its last growth outlook in July and downside risks may have become greater over the past two months.”

In a report released last week, the United Nations Conference on Trade and Development (UNCTAD) said the world economy is “heading into troubled waters, with recession in 2020 now a clear and present danger.” The report expected global growth to fall to 2.3 percent this year, compared with 3 percent in 2018. If realized, the rate would be lowest since 2009 when the world economy contracted 1.7 percent in the aftermath of the global financial crisis.

While warning lights are flashing around the world economy, Korea has done little to address its chronic economic weakness. Some pessimistic economists forecast growth to fall below 2 percent next year amid clearer signs of deflation.

The country’s latest economic plight is attributed largely to the incumbent liberal government’s package of economic policies turning a blind eye to economic realities — the steep rise in the minimum wage, for instance.

What is needed most to restore vitality at this point is to encourage the private sector. Moon and his economic aides have focused solely on fiscal expansion, but it’s questionable whether such a policy will work.