[The Editors' Verdict] Has There Ever Been a Time Without Crisis?

Concerns Over 1% Economic Growth Next Year
Focusing Too Much on Crisis May Mean Missing Opportunities
Perseverance, Like in the World Cup, Can Lead to Overcoming Challenges

[Asia Economy Kang Hee-jong, Economic and Financial Division Research Team Content Manager] "Next year, the global economy is expected to fall into a recession. Looking back, we have heard for decades that 'next year will be harder than this year.' Nevertheless, we have grown every year, and we will do so again next year." These were the words an elderly business veteran with graying hair shared with younger entrepreneurs at a recent gathering. The venue erupted in cheers and applause at that moment.

Forecasts suggest that our economy will remain in the 1% growth range next year. The Bank of Korea projected a growth rate of 1.7% for next year, lowering its previous forecast by 0.4 percentage points. The Korea Development Institute (KDI) and the Organisation for Economic Co-operation and Development (OECD) also forecast our economic growth at 1.8%. This is due to the challenging external environment surrounding us.

With less than a month left in 2023, the adverse factors that troubled us this year show no signs of improvement next year. The Russia-Ukraine war, which has shaken global commodity markets and supply chains, has no clear end in sight. The U.S. Federal Reserve (Fed) will continue its tightening measures next year to curb inflation, which has surged to a 41-year high. China, our largest trading partner, continues its zero-COVID policy, further dragging down an already struggling global economy.

Recently, the British current affairs weekly The Economist cited the word "permacrisis," chosen as the 2022 Word of the Year by the Collins English Dictionary, explaining that this term accurately reflects the unstable world we face in 2023. "Permacrisis" is a compound of "permanent" and "crisis," meaning a situation where crises persist continuously.

Korea's economic situation is no exception. Concerns are growing in the financial market due to liquidity tightening caused by project financing (PF). In the real economy, eight consecutive months of trade deficits have increased unease. It is important to face the crisis before us squarely, as it allows us to stay alert and prepare. However, being too absorbed in the crisis can cause us to miss real opportunities. This is exactly such a time. Looking at it coldly, the crises currently discussed are well known to everyone. These crises are likely not true crises. Moreover, most are in the process of resolution or winding down.

The Russia-Ukraine war will reach a critical turning point this winter. After enduring severe damage through the winter, Russia and Ukraine are likely to seek exit strategies in some form. The Fed has already indicated a slowdown in tightening. Interest rate hikes are expected to stop sometime next year. China, which recently experienced "blank protests," is signaling a relaxation of its strict lockdown policies. The moment China declares a "with COVID" policy, the global economy will celebrate a recovery.

The Korean national football team achieved the remarkable feat of advancing to the round of 16 with an 11% chance. Some call this a "miracle." However, the coach and players who prepared for the matches know this is not a miracle. It is simply the result of the blood and sweat they have shed. It is the outcome of persevering and working hard despite the threat of elimination. Had they focused only on the crisis and given up, there would have been no advancement to the round of 16.