September 23, 2013 11:18
Seven out of 10 Korean economists predict that the Korean economy will face a long-term slump like Japan's "lost decade."
In a survey of 42 economists released by the Federation of Korean Industries on Sunday, 31 predicted "a high possibility of a Japanese-style long-term economic slump." Only a handful said such a slump is unlikely.
About half of the experts who expect a drawn-out recession cited sluggish consumption and investment, followed by the low birthrate and aging society and a sluggish real estate market.
The long-term slump in Japan was sparked by an asset price bubble in 1991. It went on for an unprecedentedly long time due to political and financial misjudgments by the authorities and a missed chance to implement pump-priming policies.
When asked how to avoid a long recession, the experts called for creation of growth potential, stimulating consumption and investment, economic and industrial restructuring, rejuvenation of the real estate business and bolstering financial stability.
The majority of economists said the low growth of the domestic economy has reached a serious degree.
The Korean economy had has been practically flat for eight quarters since the second quarter of 2011. Only in the second quarter of this year did it achieve 1.1 percent growth.
The experts called for pump priming and other stimulus measures from the government.
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