[Column] Calling for Policies to Revive the Economy

It is common to evaluate a mountain by its appearance. People often comment on the beauty or characteristics of a mountain based on its overall shape and form, without paying much attention to the types of trees it contains. However, the trees within a mountain can be a crucial indicator for truly understanding it. A mountain filled with miscellaneous trees and one with so-called good trees are fundamentally different in substance. Moreover, if a forest is plagued by disease or neglected trees due to pests or poor management, healing or quickly addressing these issues is essential to creating a beautiful forest and a scenic mountain. The mountain, forest, and trees are an inseparable bundle.

I believe the economy is not much different from a mountain. There is a growing sense of hope for signs of economic recovery. With the inauguration of a new government, the public seems to expect unprecedented and groundbreaking policies. However, it appears difficult to establish optimal relations with the United States, China, Russia, and Japan, and recent developments in North Korea suggest that inter-Korean relations are unlikely to improve. These factors will also hinder the recovery of our economy.

Although the exchange rate is gradually rising, it is fortunate that the domestic financial market remains relatively stable. It seems that foreign investors have become somewhat accustomed to the North Korea risk. This could indicate that the international credibility of the Korean economy is that much higher. Of course, judging by North Korea's recent actions, there are no prominent signs of heightened tension on the Korean Peninsula. For now, there are no major issues with foreign currency liquidity?a key measure of financial market stability?and the global economic trend is relatively stable as well. Therefore, at least for now, the argument that the Korean economy has passed its lowest point or that the overall industry is entering a broad recovery phase is gaining credibility.

The recovery in semiconductor prices, the increase in automobile sales, and the revival of the shipbuilding industry all attest to this. However, with the new administration, there are legislative proposals such as the "Yellow Envelope Act" and amendments to the Commercial Act that could dampen large corporations' investments, which merit close attention. Overall, it appears that Korea is preparing for a pleasant hike in a tranquil forest, but significant hidden obstacles are emerging internally. Thus, there are many challenges for the Korean economy to climb the mountain smoothly.

In particular, it is problematic that the new government itself is actively "building economic barriers." The Trump administration in the United States is pursuing high-tariff policies, and it is a major concern that we are directly affected by these measures. The government must resolve the tariff war with the United States diplomatically and wisely. This is the government's top priority and a task that must be addressed. Although the government recently claimed to have resolved the tariff issue with the United States, the public and businesses remain unimpressed, as they believe the reality is quite different.

Even though the global economy is showing signs of recovery, the lack of a driving force to accelerate this trend is also problematic. While there is an abundance of liquidity in the market, funds are flowing only into stocks and real estate, remaining disconnected from the investment sector. We may have escaped a state of panic, but we are still trapped in the tunnel of recession.

Even if the real economy is improving, there are hardly any clear signs. Local commercial districts are collapsing, and the number of self-employed individuals facing ruin is increasing by the day. The financial market, as if walking on a knife's edge, could burst at any moment. An accurate diagnosis of the current economic situation by the economic team is crucial. This will serve as the basis for preparing and presenting policies suitable for the "economic recovery period," going beyond the simple policies that were mobilized during past economic crises.

I believe the approach of aggressively injecting money and increasing fiscal spending cannot last long. It is important to create a virtuous cycle in which businesses revive and jobs are created, leading to increased demand. Expanding fiscal spending through livelihood support, rather than helping the real economy recover, will only place a heavy burden on prices.

We must also keep a close watch on trends in domestic and international financial markets, and the global trend of falling interest rates is another major hidden risk. The global decline in interest rates could trigger severe inflation by increasing corporate and household debt. Just as good trees make a great forest, all efforts must be focused on improving the structure so that sound companies can form the backbone of the economy. Strong leadership from the economic team is needed now more than ever.

Given the looming crisis of mass layoffs among non-regular workers, I believe the timing of implementing measures such as the Yellow Envelope Act should be carefully adjusted. Whether unions or workers, they must grow and thrive together with businesses. Economic issues should not devolve into ideological conflicts or labor-management power struggles. To reduce external dependency and stimulate domestic demand, attention should also be given to the systematic development of service industries such as education and healthcare. Any lingering embers of internal risk must also be extinguished one by one.

If we have so far been preoccupied with putting out the urgent fires of economic crises, it is now time to accelerate the full-scale recovery of the economy. I hope the economic team will further refine their policies and demonstrate strong momentum so that the economic recovery can truly take off.

Haebum Choi, Former President of Changwon University, PhD in Economics