(EDITORIAL from the Korea Herald on Jan. 2)

A message of hope

In times of national crisis, it is only a matter of course for Korean people to
look to their president for not just crisis management but a prescription for
recovery. As such, public attention will be drawn to the New Year address
President Lee Myung-bak is set to make today.
Presidential New Year addresses are usually scheduled for the third or fourth
week of January. But Lee advanced the schedule, apparently because he felt it
urgent to communicate with the people about what all the economic actors - the
government, corporations and households - will have to do to overcome a looming
recession.
It goes without saying that Lee should deliver a message of hope to people
undergoing the severest economic hardship since the 1997-98 Asian financial
crisis. Those include families living below the poverty line, corporate employees
being forced out of work and college graduates who, fresh out of school, are just
entering the job market.
But the presidential message must be anchored on a watertight understanding of
reality. The last thing he should do is repeat the past mistake of giving people
unwarranted assurances that the turmoil will be short-lived and the nation's
economy will soon be back on track.
The economy is in such bad shape that there will be no quick fix. Industrial
output gives an indication of the depressing state of affairs.
In November, industrial output declined 14.1 percent from a year ago, the largest
drop since the National Statistical Office started to collect such data in 1970.
That should not come as a surprise, given that exports in the same month
plummeted as much as 19 percent.
Under these circumstances, it is only natural for corporations to withhold
investments. Facility investment fell 18 percent in November. Companies have
little confidence in their business outlook, as the Bank of Korea's business
survey index shows. The index for January fell to a record low of 46 from 54 for
December.
No wonder few companies are hiring. Instead, many of them are cutting payrolls.
The government predicts the number of new jobs created this year will be about
100,000, well below the optimal level. Conventional wisdom has it that it is
necessary to create 300,000 to 400,000 jobs each year if the nation is to avoid
serious employment problems.
All these scary developments have foreboding implications for Lee, who has until
recently been held hostage by his campaign promise of unbelievably high rates of
growth - an average annual rate of 7 percent during his five-year presidency.
He had not paid much attention to the U.S. mortgage market debacle until after it
started to bring the U.S. financial industry crashing down, unleashing the worst
global financial crisis since the Great Depression. The Lee administration was
forced to revise its forecast downward several times because domestic economic
conditions were fast deteriorating as a consequence of the deepening global
crisis.
Now the final official forecast stands at 3 percent. Few appear to believe that
even this level is attainable. Lee himself has dropped hints that the economy
will most likely shrink during the first and send quarters of this year. The
problem is that each revision has undermined public trust in his administration.
In addressing the nation today, Lee will have to come to grips with global
economic reality and its impact on the Korean economy. He will have to say in
unequivocal terms what his administration will do to overcome the crisis, no
matter how painful his measures will be. Then he will have to call for the kinds
of sacrifice each corporation and household is required to make in pursuit of an
early recovery.
(END)