Reasons to be hopeful for New Year (2024)

By Sah Dong-seok

With the days numbered before the start of the New Year, gloom and doom abounds everywhere.

As the year-end state of the economy remains depressed as usual, department stores and sales outlets have been offering big bargains. But not many people seem to be showing interest amid worries that the current economic slump may be protracted for a long time.

Choi Kyung-hwan, the incumbent administration's economic czar, promised a new path for the economy upon his inauguration, but little has changed so far. Now it's certain that this year's economic growth target will be missed, and it's likely that the growth rate for the upcoming year will remain in the 3 percent range. This means that growth will fall short of 4 percent for five years in a row since 2011 ― a phenomenon rarely seen in the country's rapid economic development history.

The biggest problem is that this low-growth trend will be the norm in the midst of a sustained decline in the nation's growth potential as a consequence of a low birthrate and the rapidly aging population. With jobs remaining scarce, especially for college graduates, a nightmarish scenario ― two youngsters supporting one elderly person in just a decade ― looms large. The most pessimistic scenario says Koreans might perish from the earth by 2160.

Politics seems equally hopeless. Lawmakers spend days and nights wrangling over political issues unrelated to the people's livelihood, which sparks skepticism of whether we need the National Assembly at all.

President Park Geun-hye remains stubborn although her approval rating has been on a constantly downward spiral in the aftermath of the latest "memogate" scandal. Despite all accusations against her notorious incommunicado and self-righteousness, she acts as if nothing has happened. Even leaders of the governing party seem unwilling to speak straightforward during their rare meetings with the female head of state at the presidential office, although they are required to do so.

What appears to be most serious is that the recent gloom has been caused by our own internal problems, unlike in the past when external factors were blamed largely for the turmoil ― as was seen in the currency crisis in the late 1990s. Now many people seem to worry that Korea might become a ''frog in boiling water'' dying while not feeling what it's all about.

To be sure, this is a time to be fearful about the future of Korea. But this also should be no time to give up hope. And there are reasons to believe so.

The most hopeful sign is the global oil price plunge, which enabled the U.S. economy to grow at a 5 percent annual rate in the July-September period, the fastest clip in more than a decade. Given the time lag of about six months before lower crude prices begin to influence the economy, its positive impact can be beyond our imagination.

Korea is the world's fifth-largest crude oil importer, spending more than $100 billion a year, about 7.6 percent of its gross domestic product. So Korea is one of the main beneficiaries of the oil price drop.

Even a simple calculation shows that companies can gain more profits as a result of lower production costs if crude prices tumble. Consumers for their part can afford to buy more with the same amount of money because they spend less on automobile fuels or heating. According to the Hyundai Research Institute, a 10 percent fall in oil prices would trigger a 0.27 percent rise in the nation's GDP.

Most encouraging is the International Monetary Fund's recent upbeat forecast for the global economy. The international funding organization said the plunge in the price of oil represents a global "shot in the arm'' which could boost overall world economic growth by between 0.3 and 0.8 percent.

While it's true there can be increased risks in overall financial stability around the world because of oil exporting countries' possible turmoil, there is every reason to be more hopeful about the future.

What's needed most then is to break the latest entrenched norm of low growth whatever may happen, cashing in on the crude price plunge. Taking into account our realities, it would be all but impossible to expect the Korean economy to revive should we give up now.

It's encouraging in this regard that the government has pledged to carry out structural reforms in its belief that the coming year will be a "golden time'' for the Korean economy to build a new foundation for long-term growth.

The problem is our politics, which is failing to even take a step forward despite people's aspiration for political reform. Most worrisome is that President Park and her aides have yet to realize that her presidency is in its gravest crisis now. She has not much time even if more than three years remain before her five-year tenure ends. Hopefully, she will revamp state affairs across the board in the New Year by boosting communication and listening to others.

The writer is the executive editor of The Korea Times. Contact him at sahds@ktimes.co.kr.