Drastic times call for drastic measures. As the Organization for Economic Cooperation and Development suggested, it is time for the global economy to take a “comprehensive and collective action” to tackle and overcome the low-growth trap.

South Korea is no exception to this global downward spiral, as over the last couple of weeks a series of statistics have clearly showed its key economic data, such as employment, production, consumption, inflation and now growth, pointing south. 


The Bank of Korea said Thursday that Korea’s gross domestic product grew 0.5 percent in the first quarter of this year, from the fourth quarter of last year. This marks the lowest since the second quarter of last year.

While growth continues to drop on the back of low private consumption, investment and exports with only fiscal spending increasing through greater debt, rates of smoking, suicide and the aging population remain on top. Rising inequality -- resulting from these negative forces that have also brought about slow wage growth and productivity -- are bound to do more harm than good to the society, as economists such as Nobel laureate Joseph Stiglitz and Jang Ha-sung have warned that it could further trigger “public disorder and anger.”

Korea can no longer afford to remain in denial when the data indicate otherwise, but needs to acknowledge and accept this reality by putting aside political differences to drive change by giving more weight to boosting small businesses and wages to break away from the downward cycle, observers say.

The Bank of Korea Gov. Lee Ju-yeol has noted in an internal newsletter that a diagnosis claiming that Korea is facing a prolonged slowdown has become a “realistically persuasive argument.”

As influential and effective as fiscal and monetary policies could be for economic recovery in the short-term, they may not be enough to boost confidence in the long-term. And this calls for drastic and collective measures to help especially the young see a glimmer of hope.

“If the young have greater difficulty entering the labor market -- and especially getting good full-time -- their development, and the growth potential of the economy, may be permanently impaired,” Angel Gurria, secretary-general of the OECD, said in the recently issued 2016 economic outlook report.

“The low-growth trap is not ordained by demographics or globalization and technological change. Rather, these can be harnessed to achieve a different global growth path, one with higher employment, faster wage growth, more robust consumption with greater equity.”

By Park Hyong-ki (hkp@heraldcorp.com)