More Than Half of Experts Say "Similar or More Difficult Than the 2008 Financial Crisis"

Kyunghyong, Survey of Economic Experts on 'Recent Economic Situation and Key Issues'

Perceptions of the Current Economic Situation

[Asia Economy Reporter Choi Dae-yeol] A survey revealed that nearly half of domestic economic experts believe the current economic situation is similar to or more difficult than during the 2008 global financial crisis.

According to the recent economic situation survey results released by the Korea Employers Federation on the 13th, 27% of respondents answered that the situation is similar to the 2008 financial crisis. While not as severe as the IMF foreign exchange crisis, 19% said it is more difficult than in 2008, and about 7% said it is similar to or worse than the IMF crisis. In total, about 53% viewed the current situation as comparable to or more difficult than past crises. The survey included responses from 204 professors of economics and business administration.

The most cited cause of difficulty was the emergence of global economic and political risks. The Russian invasion, US-China hegemonic rivalry, and soaring energy prices have had or are having a significant impact on the domestic economy. Additionally, some pointed to Korea’s externally dependent economic and industrial structure and insufficient responses from policy authorities.

Regarding next year’s economic growth forecast for Korea, 79% chose 2.0% or lower. No one expected growth to exceed 2.5%. The average forecast was around 1.87%. As for the expected timing of economic recovery, 54% selected 2024, the highest proportion, while 24% anticipated recovery after 2025. Only about 22% expected recovery within next year.

Nearly half of respondents predicted that inflation would continue its current upward trend and peak around the first quarter of next year. Regarding the base interest rate, 44% said it needs to be raised from the current level but that around 3.5% would be appropriate to minimize market shocks. However, about 33% answered that the base rate should be maintained at the current level (3.0%) or lowered.

Concerning national fiscal management, about two-thirds answered that "while it is possible to increase spending temporarily to address recent corporate liquidity shortages and crisis response, balanced fiscal policy is necessary during normal times."

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