Korea’s economy has been deteriorating more rapidly than previously expected. The nation saw its first negative growth in more than 10 years in the fourth quarter of 2008, and export growth continues to plunge amid the global slowdown. Moody’s Investors recently downgraded its projection for Korea’s growth in 2009 from 2% (made in November) to a negative 2%, and this view is in line with a growing number of other analysts. Some analysts expressed concern that the nation’s economic condition is worsening faster than it did during the Asian financial crisis in 1997. To weather the ongoing global financial crisis and its spillover to the real economy, the government introduced various stimulus measures and slashed interest rates to a record low of 2.5%. However, recent indicators show that the nation is falling deeper into recession and that the government needs to act quickly to restore confidence and revitalize the economy.
Reflecting the urgency of the situation, President Lee announced that he is setting up a war room, in an underground bunker in the Blue House, where his economic teams will closely monitor changing conditions and address urgent issues. The temporary council, chaired by President Lee, was established to help overcome the fear of recession. The council members include the Minister of Finance and Strategy, the Chairman of the Financial Services Commission (FSC), the Governor of Bank of Korea, the senior secretaries for economic policy and for political affairs, and two members of the National Economic Advisory Council. Furthermore, President Lee reshuffled his economic team with an emphasis on teamwork, expecting them to carry out the urgent tasks of revitalizing the economy, stabilizing the won, and accelerating restructuring.