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The age of high economic growth, when figures hovered at 8 percent year after year, is over, declared Bank of Korea Governor Park Seung at a forum hosted by the Korea Institute of Finance on Friday.
He based the claim on permutations in the Korean economy that have seen a high-wage structure evolve. The economy would eventually make a soft-landing and post a solid rate of growth of 4 to 5 percent, he added.
Park said that Korea should learn a lesson from Germany, which has developed into a low-growth economy with a track-record of 2-percent annual growth since 1974. Significantly, it has maintained a policy of "First welfare, later economic growth¡± and a rigid labor market.
Park said that with the Korean economy slowly ossifying around a high-wage structure, growth engines for the world¡¯s eleventh largest economy would be found in knowledge-based industries, rather than in manufacturing. The public is suffering from an economic slump as uncompetitive domestic businesses are being driven out of the market and new industries are springing up, he said.
The central bank chief said that the government should broaden its social safety net for the jobless and have-nots in order to alleviate public hardship, while encouraging companies to embrace restructuring.
(Bang Hyun-cheol, banghc@chosun.com )
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