[Image] [SK] [Image] [Image][Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Image] [Editorial] Flood-Stricken Economy [Image] [Image] [Image] 08/11(ȭ) 16:50 It is premature to assess the total amount of damage, human and property, which has resulted from the current nationwide epidemic of flooding, but an interim survey shows that the economic losses inflicted by the unprecedented deluge are immense. Accordingly, the government is called upon to reshape its economic projections for the year, as well as to take emergency steps to relieve the suffering of flood victims. According to recent reports, some 46,000 hectares of farmland have been flooded, more than 35,000 homes submerged, about 600 small and medium-size businesses, including 220 factories, have been inundated, and countless infrastructure facilities such as roads, railway routes, and embankments have been destroyed. Thus, the total amount of property damage is expected to reach two trillion won or about $1.4 billion. Due to the heavy losses stemming from the torrential rains and flooding, the domestic economy faces a substantial alteration in terms of three major macroeconomic conditions. Coupled with this, it is feared that it could suffer adverse effects from deteriorating international economic conditions related to the ever-weakening Japanese yen, apprehension over the depreciation of the Chinese yuan, and a slowdown in American economic growth. The bleak economic outlook, both domestically and internationally, is casting a dark cloud over a national economy that is already burdened by an unparalleled recession. Under these circumstances, it goes without saying that the government and the people must exert their utmost efforts to overcome the complex economic woes. Drawing our concern in this regard is the dismal prospect that the nation's gross domestic product (GDP) will shrink by five to six percent, from the initially projected negative four percent, in view of the flood damage to industrial facilities and farms. It is estimated that Korea's annual harvest will decrease by 10 to 20 percent from the targeted output figure, and the anticipated shortage is already pushing up the prices of rice and other vegetables. What's more, related authorities forecast that unemployment could soar to 8.3 percent in the fourth quarter of the year, up from 6.9 percent in the second quarter. This unemployment rate could put the number of jobless at some 1.8 million, considering that a one percent drop in GDP growth raises unemployment by more than 100,000. Also causing our apprehension is the expected rise in consumer prices by a a factor of about 10 percent, up from the maximum of 9 percent, which was the target agreed to under an accord with the IMF. This increase is largely due to the soaring prices of agricultural products and will surely require the government to release its grain stock to curb spiraling prices. Nonetheless, the positive effects of this measure are doubtful in the face of heavy inflationary pressure. All told, the exacerbated economic conditions are all but forcing the government to undertake a comprehensive review of its economic blueprint and map out a more realistic and effective plan to cope with the new national crisis. In particular, the readjustment of its economic projections, ranging from the long-range macroeconomic program to prompt and active steps to relieve a flood-ravaged populace are urgently needed. -------------------------------------------------------------------- (C) COPYRIGHT 1998 THE HANKOOKILBO