[SBS Kim Sung-joon's current affairs observatory]

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■ Broadcast: Kim Sung-joon's current affairs observatory (FM 103.5 MHz 14:20 ~ 16:00)
■ Progress: SBS Kim Sungjun anchor
■ The broadcast date and time: Wednesday, June 19, 2019
■ Discussion: Lee In-cheol, President of the Economic Research Institute

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- September 2017, the peak of the economy ... Bank of Korea
- Policies to be released when the economy rises;
- The Korean government has recognized the uncertainties of internal and external uncertainties.
- Interest rate cut to be expected in 3-4 quarters
- It's hard to expect that the race will survive the next race.

▷ Kim Seong-joon / Host:

It is a "very good economy" that makes it easy to solve the economic story you should know. Lee In-cheol, President of the Economic Research Institute Welcome to.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. Hi.

▷ Kim Seong-joon / Host:

I was wondering what this is. You decide when the game has peaked, so to speak, after the time has passed since the high and low points of the cycle. But this time, the government is postponing that judgment?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. It is clear that the economy is in a downward phase as everyone is feeling it now. When did this peak, peak? I need to know this to be able to diagnose the game. So there is the Economic Statistics Subcommittee under the National Statistical Commission. This could be manipulated if the government releases these statistics. Therefore, it is made up of 9 people.

▷ Kim Seong-joon / Host:

Let us be objective and fair.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

That's right. So all of this was the peak of September 2017. This is sympathy. However, the opinion that the results were to be disclosed was dominant. Then why did we postpone this announcement to September? The reason for this is that there are actually two indicators that determine the cycle of the game. There is GDP. GDP is announced quarterly. And you know what it is. This is announced monthly. I think that this change is not so big, so I need to discuss some more in depth. On the surface. By the way, if you look into the inside of the game, it means that the speed of taking the peak of the game is lower than the past. If this is the case, income-led growth would have been spurred in the downward trend of the economy, And the Korean government raised the interest rate twice, and raised it in the downward direction.

▷ Kim Seong-joon / Host:

Then it is completely cold in the economy.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

That's right. I raised it twice in November 2017 and November 2018. So, it is four years and six months until September, because the economic recovery period was bottom in March 2013. The descent has been less than two years and I see it go down. If you announce this right now, you may have problems. I think I made this judgment.

▷ Kim Seong-joon / Host:

According to some reports, there are political calculations, too. In other words, September of 2017 was the moment when the government of Moon Jae-in entered the economy and started pushing economic policy represented by income-led growth very strongly. If so, politically speaking, the economy has fallen due to income-led growth. Moreover, as you say, is not it going to descend very fast? I am afraid of this accusation and I am postponing it. There was a story like this.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Even if you take that blame, it 's time for the prescription to come out. Because of that, how should the government cope in the downward phase to know the exact reason? This is the solution. Then, based on this cycle, as the government puts it, it is possible to properly arrange various economic policies related to the 52 hours of the week related to interest rate policy, fiscal policy and minimum wage. The problem is that we have been postponing the decision on the peak of the economy since March 2013 for the past six years.

▷ Kim Seong-joon / Host:

This is not the first time?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

That's right. It means that you can not write the exact prescription. In fact, if the peak of July 2017 is correct, as you said, the government started to raise various income tax rates, corporation tax rates, and raise the minimum wage. It is the time when I pushed these things out. Therefore, it is pointed out that the opposition pointed out that the policy which should be used when the economy is in an uptrend, was carried out in the downward phase and called for the employment crisis.

▷ Kim Seong-joon / Host:

But if you keep putting up the evaluation of such a peak. National Statistics Commission What is the Economic Statistics Subcommittee?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

It is a recession period when the economy is peaked after a period of recovery and boom in the cycle. But it can usually be six or seven or eight years. I talked about the low point, but the judgment of high point was delayed. It took four or six months. I had to continue to judge after that, and it was delayed.

▷ Kim Seong-joon / Host:

In fact, I think that Lee Ji-yeong, the governor of the Bank of Korea, is likely to cut interest rates. I think it's too sudden.
▶ Lee, In-cheol Lee, Director, Economic Research Institute:

What did the governor Lee Lee say at the MPC last month? It is not a situation to review the rate cut now. I got a good line. However, as soon as 10 days passed, my position was sudden. Earlier this week, there was a 69th anniversary event of the Bank of Korea. What did the governor say? I told him that I will respond appropriately to changes in the economic situation. But the remarks of the Governor of the Bank of Korea are very cautious. I do not give a strong rate cut signal like this. However, since this remark has already been announced, the interest rate of the bond market in the financial market is falling. It reacts. Then why is the governor's perception of the game changed 180 degrees? It is uncertainty both inside and outside. As the US trade dispute has been on the rise for a long time, we expect to see a rebound in the semiconductor industry in the second half of the year, given the bottom of 3Q. This point is continuing to be pushed forward from next year. So, the prospect of the export dependence of our economy will become even darker. And recently, the economic president of the Chung Wa Dae, Yun Jong - won, There is a possibility that the downside risks to our economy will be prolonged. Because I'm in a relationship with this. The GDP correction between January and May after the May MPC has grown to -0.4%. It is said that Han has not recognized the growing uncertainties both inside and outside of Korea.

▷ Kim Seong-joon / Host:

Then it is very likely that interest rate will be reduced immediately.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Now, the fact is that the market interest rate has come down since April. So, it's the timing of interest rate cuts. One of the seven MPs in the May MPC should cut interest rates because it was a minority opinion. So this year, the MPC remains four times. Once in July, once in August, and four times in October and November. As for the market, the timing of cuts is as early as August and the third quarter. Or maybe not at least once in the fourth quarter.

▷ Kim Seong-joon / Host:

Do you think you will not do it in July?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

That's right. Until now, the BOK has never preemptively implemented monetary policy. I have seen the United States do it first and have done it afterwards. In fact, the US is actually holding a FOMC meeting on the 18th and 19th at the monetary policy meeting in local time. After watching this result, I would like to give a somewhat stronger rate cut signal and confirm that it will lower the actual interest rate.

▷ Kim Seong-joon / Host:

The United States now weighs the timing of the rate cut. Is not it hard for America to go down anyway?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. For now, President Trump has put aggressive pressure on Powell. In the meantime, the Fed members inside the Fed. There are 12 Fed members in the Fed. I'm turning to some doves. But what did President Jerome Powell say earlier this month? We will respond appropriately to maintain the expansion phase of the US-China trade war.

▷ Kim Seong-joon / Host:

That's also very strong. Speaking to the Fed Chairman.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. So, in the financial markets, the Federal Reserve could signal a downward revision of the growth rate, a lowering of the inflation outlook, and a drop in the outlook for interest rates. Therefore, the US is expected to cut interest rates in September or December. Of course, our Open Market Committee will be able to confirm in the morning on the 20th. At this meeting, the prospect that interest rates will freeze is predominant. How strong a rate cut signal will the Fed make? With this in mind, the timing of interest rate cuts is from September to December. Of course, given that the downward pressure on the economy has become too severe, it could be accelerated until July. At least not in July. Then, of course, we are likely to be postponed.

▷ Kim Seong-joon / Host:

Anyway, all this talk about the United States this fall and we are going to go down to the interest rate seems to be obvious. On the premise that the second one will be passed. There is a story that there is not enough. In this way, the money is released and the interest rate is lowered. Will the game survive?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

It's very negative. Even if you do both, there are very few experts who expect the game to improve. First of all, how many times is it possible to cut the interest rate? Currently, the benchmark interest rate is 1.75% per annum. You can do it once. So, how much will you pull down once you pull the economic growth rate?

▷ Kim Seong-joon / Host:

Are you telling me that you will be down 0.25 percentage points once?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

That's right. If it is lowered to 1.50%, the GDP traction effect is 0.02%.

▷ Kim Seong-joon / Host:

It does not make much sense.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

And what is proposed to the National Assembly is 6.7 trillion won. The IMF will have 0.5 trillion won, or about 10 trillion won, of our GDP. But what did the governor Lee Ju - jae say at the time? I would say that if we do 10 trillion won, we will pull our economic growth rate up to 0.1%. But it's two-thirds of it. So, even if you combine these two, you will have to pull down the money and lower the interest rate to about 0.1% of the traction effect.

▷ Kim Seong-joon / Host:

The current rate of growth is falling from 3% to 2.5% and 2.3%.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. The economy bottomed at 3.1% in 2017. In 2018, 2.7 percent last year, the government did not come this year. I did not go anywhere from 2.6 to 2.7%. The BOK has already dropped to 2.5%.

▷ Kim Seong-joon / Host:

Is not it because you do not know how much the government will not go down?

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

So, at the end of this month, I'm sure that by the end of June, I will go down to the mid-2% level with economic policy direction in the second half of the year. Anyway, if you look at these things, it will be easier to defend yourself from the downward pressure on the economy than to save the economy.

▷ Kim Seong-joon / Host:

If you hold it. Do not fall further. I am worried. I do not know why it is so good to talk about time and it is hard to talk about it. I'll look forward to next week. Today is a very good economy. Lee In-chul was the director of the Economic Research Institute. Thank you.

▶ Lee, In-cheol Lee, Director, Economic Research Institute:

Yes. Thank you.

(Photo: Yonhap News)