ID :
57174
Fri, 04/24/2009 - 07:44
Auther :
Shortlink :
https://oananews.org//node/57174
The shortlink copeid
EDITORIAL from the Korea Times on April 24) - Long, dark tunnel: Proactive measures needed to tackle prolonged recession
The International Money Fund (IMF) revised down its growth projection for the world economy Wednesday, reflecting downside financial risks and growing fears of a prolonged recession. It's right for the fund to paint a gloomier picture amid the unprecedented global financial and economic crisis.
What's clear is that we're still in the middle of a long, dark tunnel, so it will
take most countries more time and effort to see a recovery. Some critics may
accuse the IMF of being too pessimistic and slashing its economic forecast too
frequently and too drastically. But the latest downward revision is a proof of
deteriorating global financial conditions and their spillover effect on the real
economy.
In this regard, it's not surprising that the IMF forecast the global economy to
contract 1.3 percent this year, down from its January projection of 0.5-percent
growth. It also curtailed its growth projection for next year from 3 percent to
1.9 percent. The cuts indicate that the pace of an economic rebound is far slower
than previously anticipated. South Korea, heavily dependent on exports, is no
exception.
In fact, people breathed a sigh of relief when the IMF predicted three months ago
that Korea will enjoy a faster recovery, with 4.2-percent growth in 2010, than
any other economy in the world. The prediction was a silver lining over the
recession clouds, as the fund forecast that the Korean economy would shrink 4
percent in 2009, down from its previous projection of a 2-percent rise. But on
Wednesday, the IMF lowered the 2010 projection to a mere 1.5 percent.
We have to come to terms with the bleaker outlook and face the stark reality in
order to work out new strategies to weather the harder times and quicken
recovery. It's necessary for the nation to sincerely accept the IMF's policy
recommendations on how to cope with the turbulence. Citing ``extreme openness and
high dependence on external demand,'' the IMF said disappointing corporate and
household balance sheets ``will exacerbate the impact of external shocks in
Korea.''
It's impossible for South Korea to be immune from the worldwide turmoil alone.
Thus, it's required for the country to actively join international efforts to
speed up economic recovery by adopting a mix of monetary easing and fiscal
expansion. The Lee Myung-bak administration should sincerely execute the
29-trillion-won supplementary budget to create more jobs and jumpstart the
flagging economy.
What's more important is that the government will have to readjust its policies
to meet rapidly changing economic conditions at home and abroad. For this,
policymakers need to work out a new contingency plan for economic stimulus and a
long-term strategy for boosting the nation's growth potential. The nation should
not delay the restructuring of banks and businesses to dispose of bad debts and
get rid of overcapacity and highly leveraged operations. This is easier said than
done. But we must do our best to safely pass through the long, dark tunnel.
(END)
What's clear is that we're still in the middle of a long, dark tunnel, so it will
take most countries more time and effort to see a recovery. Some critics may
accuse the IMF of being too pessimistic and slashing its economic forecast too
frequently and too drastically. But the latest downward revision is a proof of
deteriorating global financial conditions and their spillover effect on the real
economy.
In this regard, it's not surprising that the IMF forecast the global economy to
contract 1.3 percent this year, down from its January projection of 0.5-percent
growth. It also curtailed its growth projection for next year from 3 percent to
1.9 percent. The cuts indicate that the pace of an economic rebound is far slower
than previously anticipated. South Korea, heavily dependent on exports, is no
exception.
In fact, people breathed a sigh of relief when the IMF predicted three months ago
that Korea will enjoy a faster recovery, with 4.2-percent growth in 2010, than
any other economy in the world. The prediction was a silver lining over the
recession clouds, as the fund forecast that the Korean economy would shrink 4
percent in 2009, down from its previous projection of a 2-percent rise. But on
Wednesday, the IMF lowered the 2010 projection to a mere 1.5 percent.
We have to come to terms with the bleaker outlook and face the stark reality in
order to work out new strategies to weather the harder times and quicken
recovery. It's necessary for the nation to sincerely accept the IMF's policy
recommendations on how to cope with the turbulence. Citing ``extreme openness and
high dependence on external demand,'' the IMF said disappointing corporate and
household balance sheets ``will exacerbate the impact of external shocks in
Korea.''
It's impossible for South Korea to be immune from the worldwide turmoil alone.
Thus, it's required for the country to actively join international efforts to
speed up economic recovery by adopting a mix of monetary easing and fiscal
expansion. The Lee Myung-bak administration should sincerely execute the
29-trillion-won supplementary budget to create more jobs and jumpstart the
flagging economy.
What's more important is that the government will have to readjust its policies
to meet rapidly changing economic conditions at home and abroad. For this,
policymakers need to work out a new contingency plan for economic stimulus and a
long-term strategy for boosting the nation's growth potential. The nation should
not delay the restructuring of banks and businesses to dispose of bad debts and
get rid of overcapacity and highly leveraged operations. This is easier said than
done. But we must do our best to safely pass through the long, dark tunnel.
(END)
