Big crisis to hit Korean economy in three years

Korea's economy will fall into a grave crisis within three years if it fails to carry out industrial restructuring in time, according to the nation's top management experts. The problem is the government and creditor banks do not have the will to do this all-important job.

That is the consensus of 50 professors of business administration in a survey conducted last week by the Korean Academic Society of Business Administration and Maeil Business Newspaper.

These scholars predicted that insolvencies of marginal companies, or "zombie businesses," will go beyond the affected firms and spread to larger enterprises, including the financial sector, and will cripple the overall economy by reducing employment, investment and consumption. In short, the ensuing corporate crisis will not be just a "storm in a tea cup," the survey report said. 

A majority of the management experts are predicting that a "powerful economic impact" _ similar to the 1997 Asian currency crisis or the 2008 global financial crisis _ will hit before the Park Geun-hye administration leaves office, probably in late 2017 as predicted by 40 percent of the respondents, or in early 2018 (16 percent). 

Forty-five professors, or 90 percent of those surveyed, agree on the need to conduct massive restructuring of these "corporate zombies." Asked whether they think the government and creditor banks, both state-run and commercial lenders, will undertake and complete this task, a large number of the 47 experts said, "No." 

''The Korean economy is in for a massive crisis as the fundamental competitiveness of domestic businesses is weakening," Prof. Lim Chae-un said. "Government and business officials should carry out the restructuring of marginal businesses and industries in a preemptive manner as quickly as possible, before another huge shock hits the national economy."