It is time to put more boats afloat

South Korea’s economy is receiving a powerful lift from a semiconductor boom, but the columnist warns that rising tides do not automatically raise every boat.

The Bank of Korea recently lifted its growth forecast for this year from 2.6% to 3.3% and next year’s forecast from 2.1% to 2.9%. Excluding the rebound year after the pandemic, the 3.3% projection would be the highest since 2017. Nominal growth could reach 12% to 13%, its strongest rate since 1996.

The improving outlook is also reflected in public finances and trade. National tax revenue is projected to rise from 380.2 trillion won last year to 415.4 trillion won this year, plus several tens of trillions of won, and 584.4 trillion won next year. Even with a 820.9 trillion won budget, up 12.8% from this year, the managed fiscal deficit is projected at only 3.1 trillion won. The debt ratio is expected to fall below 50% as nominal GDP expands. Exports had reached $693.3 billion by August, raising expectations that annual exports could pass $1 trillion. The Bank of Korea forecasts current-account surpluses of $450 billion this year and $430 billion next year.

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When the tide comes in, all boats rise.

The columnist credits the semiconductor supercycle for this landscape. The boom brings clear benefits, but it also raises concerns about the economy and stock market becoming more dependent on chips, widening inequality through large performance bonuses, and fueling property prices and inflation. Still, the article says, the money generated by the boom can spread through the economy. Bank of Korea analysis suggests that higher bonuses at Samsung Electronics and SK Hynix could lift next year’s GDP by as much as 0.12% through increased consumption. Large facility investments could also support employment.

The article invokes John F. Kennedy’s phrase, “A rising tide lifts all boats,” while noting the criticism that growth does not benefit everyone equally. President Lee Jae-myung said the government must focus on growth for now to enlarge the economic “pie” and asked for more time. The columnist accepts the need to strengthen growth but questions the claim that expanding growth and welfare at the same time is unrealistic. The government, the article concludes, must clear obstacles and repair damaged boats so that more citizens can feel the recovery in their own lives.

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For now, we have no choice but to focus on growth and make the pie bigger. Only one year has passed, so I ask you to give us a little more time.