The year of 2011, which got off to a lively start with high expectations that the quality of life would soon improve significantly, is ending in woeful disappointment. Few Koreans are feeling that they are better off now than before, as income has dropped, prices have risen and not many jobs are to be found.
Few would dispute that external economic conditions are mainly to blame. The domestic economy cannot fare well when the global economy is being buffeted by a crisis of European origin. The impact of the European crisis on the Korean economy is all the more severe because it has yet to come fully out of the long shadow of the 2008-09 Great Recession.
Yet, President Lee Myung-bak’s administration finds itself to be the main target of an attack from ill-tempered, frustrated Koreans. It may feel aggrieved when it is called on to shoulder more than what it regards as its fare share of responsibility. But what can it say when it has failed to deliver even on its modest promise for 2011?
It is only natural for ordinary Koreans to feel distressed as almost all consumer prices are rising when their incomes are stagnant or declining. Many of them choose to take on additional debt to finance soaring housing costs and provide extracurricular schooling for their children. A whopping 34 percent of the respondents to a survey say that they are more indebted now than before.
The official jobless rate is low, at 3.5 percent. But the administration acknowledges that many more are out of jobs than the rate implies. For instance, many exclude themselves from among those officially classified to be jobless when they give up their search of jobs after making a few futile tries.
No wonder the level of distress Koreans are feeling is high. It is comparable to those in 2001 when a credit card crisis put the nation’s economy in a shambles and in 2008 when the global financial crisis started.
The “economic pain index,” which was devised to measure the distress level by combining the consumer price index and the jobless rate, stood at 7.5 during the January-October period, compared with 8.1 in 2001 and 7.9 in 2008. In the first 10 months this year, consumer prices rose 4 percent, and the official jobless rate was at 3.5 percent.
Worse yet, the distress level would be much higher should wages be factored in. January-September wages in real terms declined 3.49 percent a year-on-year basis, instead of rising as usual. Again, this was the third largest fall in recent years, after a 9.31 percent plunge in the first year of the Asian crisis, 1998, and an 8.54 drop in 2008.
There would be no significant changes in growth, consumer price and other economic indexes for the entire 2011 year when al figures are finally tallied in a few months from now. For instance, the Bank of Korea expects growth to be at 3.8 percent and the consumer price index to be at 4 percent.
But these figures are far off the target. The administration, whose original growth target was 5 percent, revised it to 4.5 when the economic conditions worsened soon. Nor did it take long before it revised its forecast of the consumer price index upward, from the original 3 percent to 3.9 percent.
The Lee administration’s performance is abysmally poor when his “747” election pledges is taken into consideration. During his presidency, he promised to generate 7 percent annual growth and double per capita gross domestic product to $40,000, catapulting the Korean economy to the rank of seventh-largest in the world. But he is nowhere near his promise when he is set to start his final year in office soon.
Now Lee is denounced for having been business-friendly at the expense of households in middle- and low-income brackets. For instance, his detractors claim that his administration kept the Korean currency lower than its fair value to help big businesses promote exports ― a policy that helped fuel inflationary pressure.
Belatedly, he said he was shifting his economic policy in favor of households with low incomes. But the damage could not be undone. Still worse, the nation’s economic prospects are even dimmer next year.
