[2022 Economic Outlook Survey] "Next Year's Economy, Nike-Type Slow Recovery"

Asia Economy, Survey of 35 Economic Experts
74.3% of Respondents Expect a "Moderate Speed Recovery"
Concerns Over Financial Shock and COVID-19 Uncertainty Increase
76% Believe "Real Estate Prices Will Not Fall"

[Sejong=Asia Economy Reporter Kim Hyunjung] Domestic economic experts, including heads of national and private research institutes, academic society presidents, and CEOs in the financial sector, predicted a ‘slow recovery’ for the Korean economy next year. This reflects significant concerns about financial shocks such as household debt during the interest rate hike period and the persistent uncertainty of COVID-19, making it difficult to expect a rapid and strong V-shaped recovery. Advice that tax increases are inevitable to restore fiscal soundness damaged by the government’s expansionary fiscal policy also emerged as a mainstream opinion.

According to a survey conducted by Asia Economy on the 1st among 35 domestic economic experts, including academic society presidents, heads of national research institutes, economic organization leaders, and financial sector CEOs, regarding the ‘2022 Economic Outlook,’ 74.3% predicted a ‘Nike-shaped recovery,’ meaning a moderate speed economic rebound, when asked about the economic trend next year.

The expectation of a V-shaped recovery, where a strong rebound quickly follows a temporary shock, is low due to predictable risks (gray rhinos) such as household debt deterioration during the interest rate hike phase and asset bubble collapse, as well as the rising uncertainty of COVID-19.

When asked about the tax policy direction of the next government, about half of the respondents (46.9%) expressed the opinion that the next government should attempt tax increases. However, a considerable portion (31.3%) also believed that tax cuts or tax support are necessary. Some mentioned the need for ‘partial tax cuts’ to accelerate economic growth and ‘gradual tax increases’ from a mid- to long-term perspective.

The opinion favoring tax increases is interpreted as reflecting concerns about rapidly deteriorating fiscal soundness due to the government’s active fiscal spending in response to COVID-19. Most experts believed that the next government should either minimally expand fiscal spending (55.9%) or maintain balanced budgets (26.5%). Only 8.8% supported actively increasing fiscal spending. Concerns about fiscal soundness were also notably reflected in global comparisons by international organizations. The International Monetary Fund (IMF) recently forecasted that Korea’s national debt growth rate relative to economic size over the next five years will be the fastest among 35 major countries. When asked about the real estate market outlook for next year, 76% of respondents (based on multiple responses) predicted that ‘prices will not fall.’

This survey was conducted over two weeks from November 8 to 19, during the fifth wave of COVID-19, and thus did not reflect some adverse factors such as the spread of the Omicron variant.

Editor's Note

Kang Moonseong, Professor, Department of International Studies, Korea University; Kang Sungjin, Professor, Department of Economics, Korea University; Kwon Kwangseok, CEO, Woori Bank; Kwon Junhak, CEO, NH Nonghyup Bank; Kwon Taeshin, Vice Chairman, Federation of Korean Industries; Kim Gimum, Chairman, Korea Federation of Small and Medium Business; Kim Sangcheol, CEO, Seoul Welfare Foundation and Professor, Department of Social Welfare, Hansei University; Kim Jungtae, Chairman, Hana Financial Group; Kim Jongsook, President, Korean Association of Women Economists; Kim Jinil, Professor, Department of Economics, Korea University; Kim Heungjong, President, Korea Institute for International Economic Policy (KIEP); Park Seongho, CEO, Hana Bank; Park Cheonil, Director, International Trade and Commerce Research Institute, Korea International Trade Association; Sung Myungjae, President, Korean Association of Public Finance and Professor, Department of Economics, Hongik University; Son Byunghwan, CEO, NH Nonghyup Financial Group; Son Taeseung, Chairman, Woori Financial Group; Song Euiyoung, Professor, Department of Economics, Sogang University; Shin Gwanho, Professor, Department of Economics, Korea University; Yoo Jongil, Dean, KDI School of Public Policy and Management; Yoon Jongkyu, Chairman, KB Financial Group; Lee Geun, Vice Chairman, National Economic Advisory Council; Lee Donggeun, Vice Chairman, Korea Employers Federation; Lee Insil, Professor, Graduate School of Economics, Sogang University; Lee Inho, Professor, Department of Economics, Seoul National University; Lee Jonghwa, Professor, Department of Economics, Korea University; Lim Jin, President, SGI, Korea Chamber of Commerce and Industry; Jang Sejin, Director, Seoul Institute for Social Economy; Jeon Gwangwoo, Chairman, World Economy Research Institute; Jung Seeun, Professor, Department of Economics, Chungnam National University; Cho Yongbyung, Chairman, Shinhan Financial Group; Joo Hyun, President, Korea Institute for Industrial Economics and Trade; Jin Okdong, CEO, Shinhan Bank; Heo Yongseok, President, Hyundai Research Institute; Heo In, CEO, KB Kookmin Bank; Hong Jangpyo, President, Korea Development Institute (KDI)