Low Growth Structure
The GDP growth rate in Korea reached the lowest in seven quarters, which means the Korean economy is in a slowdown. Accordingly, many people are worried that Korea cannot become a major economic power if this stagnation continues. Professionals advise that a fundamental economic restructuring in which expansive financial policies of the Choi Kyung-hwan economy team and bank rate policies of Bank of Korea (BOK) are harmonized is needed.
According to the project second quarter GDP announced by BOK on September 5, the GDP grew only 0.5 percent during the second quarter compared to the previous quarter. This is 0.1 percentage points lower than 0.6 percent, the flash figure announced in July, and the lowest since the 0.4 percent growth in the third quarter of 2012. The GDP growth rate was 0.6 percent in the fourth quarter of 2012, almost doubled up to 1.1 percent in the third quarter last year, but dropped to 0.9 percent in the fourth quarter of the same year. Finally, the GDP growth rate sank to 0.5 percent.
Choi Nam-suok, a research fellow in the Division of Macroeconomic Policy Research of the Korea Economic Research Institute (KERI), analyzed, “Looking at the current GDP growth rate, the low growth structure might become permanent. As the Development Institute (KDI) adjusted the annual GDP growth rate from the previous 3.9 percent to 3.7 percent, it is even more possible for the annual growth rate to drop further.”
In order to prevent the chronic low growth structure, an economic restructuring and regulations as well as social agreement for economic revival are needed. He said, “To solve structural problems, corporate investment should be able to be connected with deregulations, development of service industries and active overseas expansion. Through the 41 trillion won size financial policies of the Choi Kyung-hwan economy team, and expansive fiscal policies of BOK, the domestic economy has to be activated first.”