SEOUL, Oct. 19 (Korea Bizwire) – At the 18th World Knowledge Forum held at the Shilla Seoul Hotel on October 18, Harvard Economics Professor Robert Barro evaluated the current Moon administration’s focus on income growth as “not going down the right path” during a “2018 Global Economic Outlook” segment.
Drawing comparisons to policies enacted in the United States in 2009 and 2010, Barro stressed that “measures like raising the minimum wage and trying to solve income inequality are akin to handing out free meals and will have no impact as economic policies.”
He went on to say, “As in the 1960′s, where South Korea’s economic growth will spring from must be searched out. Increasing productivity is what’s important, and the implementation of such is a more correct move than the current government’s policy.”
Barro predicted the South Korean economy will no longer be able to sustain its high levels of growth, which are expected to slow to a rate comparable to other developed economies. GDP per capita should grow by 2 to 3 percent annually for the foreseeable future, he added.
Financial markets of key nations like the United States are quite stable, with the possibility of financial disaster measured at 1 percent, according to Barro.
Going on the topic of the United States, one of South Korea’s chief trade partners, Barro explained that the enactment of a good economic policy would ensure the recovery of growth rates of GDP to 3 to 4 percent and GDP per capita to 2 to 3 percent.
The Harvard professor touched on the lurking possibility of protectionist action on the part of the U.S. and the chance of new financial crises as uncertainties to pay attention to.
However, Barro eased concerns over the likelihood of U.S. protectionism, saying that the Trump-led government’s attitude towards trade pacts like the KORUS FTA (U.S. – Korea Free Trade Agreement) and NAFTA (North American Free Trade Agreement) is one geared towards cooperation. “A scenario in which the U.S. government starts a trade war will be extremely unlikely,” Barro pointed out.
He also mentioned that the odds of a new macroeconomic threat on the scale of the 2008 Financial Crisis are low.