Recent remarks by President Park Geun-hye on her economic outlook are drawing accusations of inconsistency and fickleness. Her assessment on the national economic conditions changed from skepticism early this year to an upbeat mood in early March, and again returned to skepticism this week.
In her speech to the public in January, Park said that Korea “could face the woes of mass unemployment and pay huge social and economic costs, as it did during the (1997-98 foreign exchange) crisis.”
Park expressed concern about the economy during her meeting with senior presidential aides in February.
Her stance suddenly changed on March 7. She told the aides that “there are many positive aspects. The export sector saw its (on-year) decline slowing down and private consumption has been growing.”
It seems that Park’s sudden adoption of a positive stance was aimed at blocking political attacks from opposition parties over her economic performance. Park made a rod for her own back. It is not illogical to suggest that her remarks were driven by political considerations ahead of the April 13 general election.
Opposition lawmakers denounced her for political rhetoric. In the face of criticism, Park should have picked improving economic indices to defend her remarks. Otherwise, she should have stopped arbitrarily evaluating the economic situation at least for several months.
Within two weeks, on March 21, Park again raised fears of an economic crisis, saying that “the country has faced difficulties both domestically and externally. Korea might face another IMF bailout if it fails to overcome the current turmoil.”
Most of all, it is illogical to raise the possibility of a 1997-like crisis in the current situation since -- as the administration itself judges -- there is an improvement in domestic demand and indications of an export recovery.
Certainly, the president is also a politician, and her political remarks should surely strike the right note with citizens. But as for economic policies, the president is the chief of the administration. The wrong choice of words from her could even mislead government officials, enterprises, citizens and inbound investors.
Park had warned that economic difficulties may invite a downgrade in Korea’s sovereign rating. Market observers regard her remarks as an attempt to put pressure on the National Assembly to pass specific bills aimed at reinvigorating the economy.
Her argument has some merit. However, the incumbent administration should be aware that its inconsistent assessment of economic conditions may also lead to a cut in its sovereign rating.
Credibility is the lifeline of bilateral trade on the global stage. The same is applicable in the local capital market for inbound investors.
The president should also consult with her secretaries and ministers on how to improve ordinary citizens’ quality of life. There is no doubt that the Park government has prioritized deregulations and tax benefits for the corporate sector. For households, its main policy was to promote loan-taking in an era of record-low rates.
It is too late for the administration to drastically change economic conditions before the upcoming general election. If it seeks to gain more votes via noteworthy economic performance, its target should be the 2017 presidential election.
