SEOUL: South Korea is suffering the blues. Its stock market is down as world markets rise. Growth has slowed, the external balance widened, the currency is soft, a single North Korean U-boat shakes confidence, terms of trade are bad, and the chaebols (the country's industrial conglomerates) are investing offshore. Policy choices, moreover, are confusing. Should the government seek a strong currency to boost confidence in the capital account or should it accept a weak currency for a strong current account and growth? Should it fight inflation or slump? Should it see these issues as transitory, or a deep structural crisis?
SEOUL: South Korea is suffering the blues. Its stock market is down as world markets rise. Growth has slowed, the external balance widened, the currency is soft, a single North Korean U-boat shakes confidence, terms of trade are bad, and the chaebols (the country's industrial conglomerates) are investing offshore. Policy choices, moreover, are confusing. Should the government seek a strong currency to boost confidence in the capital account or should it accept a weak currency for a strong current account and growth? Should it fight inflation or slump? Should it see these issues as transitory, or a deep structural crisis?