Experts Worry About South Korea’s Economy

    22 December, 2018

    Economic experts are concerned about South Korea's economy.

    The Hyundai Research Institute recently suggested in a report that the economy "reached its peak in May 2017."

    The finding comes at a difficult time for South Korean President Moon Jae-in, whose public approval ratings have been falling.

    An opinion study by Gallup Korea shows Moon's approval rating at 45 percent, the lowest of his presidency. Also, a majority of businesses do not have a good opinion of him.

    In this Oct. 22, 2018, photo, workers test samples of products for consistency at the factory lab at Songdowon General Foodstuffs Factory in Wonsan, North Korea.
    In this Oct. 22, 2018, photo, workers test samples of products for consistency at the factory lab at Songdowon General Foodstuffs Factory in Wonsan, North Korea.

    The Hyundai Research Institute predicts that the South Korean economy will grow at a rate of 2.5 percent next year. That is lower than the Bank of Korea's prediction of 2.8 to 2.9 percent over the next two years.

    Kim So Young is an economics professor at Seoul National University. He told VOA that the economy is slowing down, but at present, "it's not at its worst."

    Chung Min is a research fellow with the Hyundai Research Institute. He predicts the economy will reach its lowest point during the second half of 2019.

    "The economy is faced with downward risks, such as deepening trade disputes," he said.

    Economists are also concerned about other issues, such as rising household debt, Kim So Young said.

    Taeyoon Sung is a professor in the School of Economics at Yonsei University. He said the Korean economy has lost competitiveness in the international marketplace.

    Sung said that the higher cost of wages for workers, including an increase in the minimum wage, have hurt businesses.

    Developing an economic plan

    On Monday, the South Korean president called for measures to increase economic growth.

    At a meeting with government ministers, Moon called for policies that add "innovation in regulation" and support for investment. He also called for lifting "regional economies and balanced development."

    Moon noted that it is difficult to "change an economy in a five-year term..." In South Korea, the president is limited to a single term of five years. He added that "changing the economic policy direction" takes time and requires patience.

    The Hyundai Research Institute's Chung Min said that rules do need to be changed to support investment in the economy. He called for more spending on what is called social overhead capital, known as SOC. These are things that society considers important, like libraries, public parks and community projects, which are not directly linked to industry.

    Chung said an increase in SOC projects could ease a slowdown in the building industry "leading to a more active economy."

    The Hyundai Research Institute has called for economic changes, including a cut in interest rates. It also suggested that the budget permit additional spending in the first half of 2019.

    Kim So Young agreed that changes to current economic policies were wise because South Korea cannot control issues outside the country, such as trade disputes.

    I'm Mario Ritter Jr.

    Steve Miller reported this story for VOA News. Lee Ju-Hyun provided material for the report. Mario Ritter adapted the story for Learning English. George Grow was the editor.


    Words in This Story

    peak – n. the highest level, point or amount

    fellow – n. a person appointed to a position involving study or research

    minimum – n. the lowest amount permitted

    innovation – n. the act or process of introducing new ideas, devices and methods

    regulation – n. an official rule or law about how something should be done

    regional – adj. local; related to parts of a country

    overhead – n. costs for heat, electricity and other things that a business must pay that are not related directly to what the business sells

    library – n. a place where books, audio recordings and videos are kept for use

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