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Staff Reporter
South Korea has been under the global spotlight, with its economy recovering at one of the fastest rates in the world ― but many warned against hasty optimism, noting that there are several ticking time bombs waiting to go off.
Famous U.S. journalist and writer Thomas Friedman pointed out this week that the current generation is moaning under the shadow of three bombs ― nuclear bombs, ever-increasing debts and global climate change.
That seems to be especially the case for South Korea, which constantly suffers from the trio, all of which are ticking to explode at any time here.
On top of the three, the country's economy faces more hitches in a strengthening currency, high crude oil prices, property price bubbles and financial market volatility to name a few. All in all, the 10 time bombs lurk beneath the fragile Korean economy.
Other worries for Korea and its economy are growing unemployment, a low birthrate and record-high suicide rates, they said.
The most outstanding and well-known threat is the nuclear bombs, as the North Korean regime, previously touted as part of an axis of evil by the United States, has tried to arm itself with nuclear weapons.
The efforts to denuclearize the Korean Peninsula have had only limited results and the Stalinist state carried out its second nuclear test this May, cranking up political tensions.
Mostly recently, rising interest rates have generated concerns, as amply demonstrated in the rising mortgage rates ― the spread has reached almost 3 percentage points, 2.5 times higher than the 2007 average, according to the Financial Supervisory Service, Friday.
This weighs heavily on households, whose aggregate debt surpassed 800 trillion won as of the end of the second quarter. Corporate obligations also topped the 1,200-trillion-won (1.2 quadrillion won) mark.
The nation is also learning how devastating climate change might be in the face of weather variations such as hotter summers, worse typhoons and more frequent torrential rain across the country.
"I feel pity for Korean children, who have to face all the potential threats triggered by nuclear weapons, debts and climate change in much worse ways than those in other countries," a Seoul analyst said.
Even though Korea has chalked up a recovery from the financial crisis of late, a few threats still lurk.
Topping other things off, the appreciation of the Korean won and strong crude oil prices are bad news for Asia's fourth-largest economy, which depends heavily on exports while not producing a drop of oil.
The local currency once approached 1,600 won a dollar in March, but it strengthened to below 1,200 won. As a result, the country's exports are losing competitiveness as prices of Korean products denominated in dollars are going up.
Crude oil prices, which advanced to $140 a barrel last summer, plunged to as low as $40 early this year, but regained the $70-mark of late.
If the price continues to go up, the country's vulnerabilities will increase ― when oil prices rocket by $25 a barrel, Korea pays an additional $10 billion a year for the black gold.
In addition, many experts worry that rising property prices in Seoul might lead to asset price inflation. The government has come up with various measures to deal with the problem, but it remains to be seen whether the steps will work.
Also generating a headache is the highly volatile stock market with the benchmark KOSPI seeing roller-coaster movement lately.
voc200@koreatimes.co.kr
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