Key lies in deregulation to create freer business environment
The government has presented an optimistic scenario for the economy this year, saying it will grow 3.2 percent. It is not certain, however, how realistic such a rosy economic picture will turn out. The projection seems to have taken into account the “base effect” compared with an economic contraction last year. It is much like the relatively good performance of local exporters in 2020 was owing mainly to the dismal foreign shipments of 2019, which tumbled 10.3 percent from the previous year.
Economic conditions for this year are more uncertain than ever before. Even if the government begins COVID-19 vaccinations as early as February, the nation will not likely attain herd immunity until late this year. Until then, wearing masks and social distancing is an inevitability, hindering the recovery of domestic consumption. Sharply reduced employment will also delay economic recovery, leading to lower income and sluggish consumption. The prolonged U.S.-China trade conflict will adversely affect Korea's exports.
This is no time to remain optimistic about the economy. The government should frankly explain the gloomy reality to people and call for continuous perseverance. A more responsible government should prepare for the worst-case scenario and work out all countermeasures available. A good starting point is to allow more freedom for primary economic players, including enterprises. For Korea not to lag in this era of technological innovation, the government ought to create an environment where anyone can use their imagination and set challenges for themselves as freely as possible.
Policymakers should eliminate regulations so those who have new ideas can put them to use. There are limitations to creating jobs and bolstering consumption with taxpayers' money. For the government to continue playing that role, someone will have to pay taxes. The government has to promote entrepreneurship and innovation to revitalize the economy. Korean companies are in fiercer competition with global rivals for the nation's economic future. Let them focus on conducting research and development and enhancing productivity, rather than hampering them with various regulations.