Yoon Hee-sook: "The Big Problem with the Korean Economy Is Its High Uncertainty"

KBS Radio Interview, Analysis of Korea's Trade Balance
"No Need to Worry Much About Current Numbers"
"Adverse Factors Are Structurally Overlapping Now"

"It's still only January and February, so discussing corporate earnings based on just the first two months seems like an overstatement. But the problem now is the significant uncertainty ahead."

Yoon Hee-sook, an economic expert and former member of the People Power Party, made this assessment regarding the Korean economic situation in an interview with KBS Radio's 'Choi Kyung-young's Strongest Current Affairs' on the 2nd.

Regarding the ongoing trade deficit that has persisted for a year, former Representative Yoon said, "Based on the numbers so far, I don't think there's a need to worry too much."

However, former Representative Yoon explained, "Even if China improves, we don't really benefit much. There is this uncertainty, and then there is uncertainty about U.S. interest rates and U.S. inflation. Because of the uncertainty surrounding U.S. inflation, there is a slight risk that the K-dollar could return to the worst situation we saw last year."

Former Representative Yoon stated, "We don't need to think that we are in big trouble yet. That's why the Bank of Korea governor said recently that the Korean economy is like a fog. We have to wait for the fog to clear to understand. But for now, from a broad perspective, we are moving into a recovery cycle, which is our current outlook. However, it seems like it might be the end point of the recovery cycle, and due to uncertainties with China and the U.S., we need to keep a close watch."

Former Representative Yoon emphasized the need for structural reform and said the following.

[Image source=Yonhap News]

"Since the Berlin Wall fell in 1989 and from 1990 until now, for 30 years, we have fully enjoyed everything that an export-driven economy could gain in the unstoppable wave of globalization. That paradigm is indeed changing now. In the process of this paradigm shift, how we find our place?that is from the export perspective. To find our place within that, we need to be very agile and think about ways to improve our productivity. Moreover, we passed the demographic dividend long ago, and now aging is accelerating rapidly. So, structurally, we are currently facing overlapping adverse factors."

Former Representative Yoon said, "We shouldn't be overly reactive to the numbers from January and February this year. We need to wait a bit longer; that's a comment from a cyclical perspective. Structurally, however, the situation is very concerning. To push forward structurally, and to give young people some hope in life, we need to completely overhaul the methods we've been using until now. This is essentially the story of structural reform."

Former Representative Yoon explained, "We look at countries like Finland and Israel as very good examples of agility. Finland is also agile, but there, they have built a very strong foundation based on great trust in the state. Because the foundation is strong, people mostly do not feel risk and can move freely."

Former Representative Yoon added, "The difference in the soil is that we do not have such high trust in the state. So, the current tax burden rate, or the national burden rate, is in the high twenties, but even with that, people are very displeased."

Regarding structural reform, former Representative Yoon said, "Anyway, if this is a good thing, the public sector should take the lead. It is right to criticize that preparations have not been made until now. But from now on, we must prepare very diligently."