(EDITORIAL from Korea Herald on Dec. 11)

Korea's per capita gross national income is projected to decline from $20,045 last year to $18,300 this year. The fall in GNI in terms of U.S. dollars speaks volumes about the nation's poor economic state of affairs. Even more troubling, however, is that the worst is yet to come.

The Korean economy has lost much of its vitality, as evidenced by the first
current account deficit since 1997, the highest rate of inflation in a decade,
snail-paced job creation and a decline in investments.
True, gross domestic product will have grown. But this growth will have been
negated by the weakening of the Korean won. As a result, per capita GNI will have
retreated to the same level as 2006, according to the Samsung Economic Research
Institute, which estimates this year's average exchange rate to be 1,061 won per
dollar, up from 929 won per dollar last year.
Per capita GNI has grown steadily in the past. Last year, it finally surpassed
the $20,000 mark, perceived by many Koreans as the threshold for joining the
group of advanced industrial nations. The retreat to the level of 2006, when the
figure was $18,372, has many Koreans wondering if Korea is following the
footsteps of certain Latin American countries, which were once prosperous but
have degenerated into Third World status.
Indeed, next year will no doubt be worse for Korea. Economic think tanks and
financial institutions have recently been downgrading Korea's 2009 growth
outlook. Among them is the Switzerland-based UBS, which came up with the shocking
prediction that the Korean economy would shrink 3 percent next year, which would
be the first contraction in 11 years.
The picture may not be as grim as painted by UBS. Still, many agree the growth
rate will dip below 2 percent. The economic conditions are deteriorating so fast
and so extensively that top policymakers find it extremely difficult to tell what
the domestic economy will be like next year. Even the Bank of Korea delayed its
forecast, which had been due on Tuesday, until tomorrow.
Many economic players in Korea may mistakenly believe that the economic crisis
will soon be over. That is nothing but wishful thinking. It will probably stay
with us for a few years to come, if not longer.
A decade ago, the financial meltdown was confined to Korea and several other
Asian countries. The rest of the world remained intact. Because of this, Korea
could clean up the mess, boost exports, put itself back on track on its own and
move out of International Monetary Fund supervision three years ahead of
schedule.
But the current crisis is global in scale. With few signs showing an early
recovery of the world economy, it will be much more difficult for Korea to expand
exports. Both Korean corporations will have to come to grips with this stark
reality and start the painful process of restructuring. Households are also
required to tighten their belts.
Of course, President Lee Myung-bak and his administration should spearhead the
efforts for domestic recovery. The first job the Lee administration will have to
do is to revise the economic outlook contained in the 2009 budget request, which
it submitted in October. It will have to make an accurate assessment, come clean
and tell the nation in unequivocal terms about what sacrifices everyone will have
to make in what promises to be an uphill battle.
Lee will have to communicate with people about the harsh prospects and reach out
to foes as well as friends for support. In promoting political integration, he
may emulate U.S. President-elect Barack Obama's "team of rivals." In this regard,
he may appoint those close to former Presidents Kim Dae-jung and Roh Moo-hyun to
top public posts if their competence has been proven.
(END)