Good morning, fellow Koreans,

Today, I want to speak with you about the recent global fiscal crisis and economic conditions in Korea.

Only three years after the global financial crisis of 2008, the world economy is faced with yet another crisis situation.

The recent crisis has emanated from a handful of European countries, including Greece. It has been aggravated by the fact that the markets have lost trust in the governments of these countries and that the credit rating of the United States has been downgraded.

It is quite worrisome because it might be more difficult to find solutions this time around and because recovery would take longer. The United States and Europe, the two pillars of the global economy, are simultaneously mired in the crisis. That is because there are gaping holes in government finances, which can be said to be the last seawall of a country’s economy. 

The current situation requires fundamental, structural measures. The shock is being felt even more strongly because the advanced countries, which have led the world economy, are at the epicenter.

In the era of globalization, the economies of all countries are intricately intertwined like a web, and so a crisis in one country instantly spills over to other countries.

For this reason, responsible countries should take the initiative in coming up with swift and bold measures at the transnational level in addition to the efforts of individual nations. International coordination is just as critical as it was in the previous global financial crisis.

Because of this reason, the heads of state from six nations, including Canada and Mexico, and I recently joined in issuing an open letter demanding international cooperation.

In this connection, I expect that global leaders will be able to discuss full-fledged international collaboration at the G20 Summit slated for early next month in Cannes, France.

As Chair of the G20 Summit last year, Korea played a pivotal role in helping overcome the global financial crisis. Likewise, the country will take on a proactive role at the Summit this time as well.

Fellow Koreans,

We have surmounted the previous global financial crisis in the fastest and most successful fashion in the world. I can assure you that the Korean economy is strong enough for our people to have confidence.

The fiscal soundness of Korea is now the healthiest in the world. The national debt represents 33 percent of GDP, a third of the average 98 percent of OECD member nations.

Having gone through the foreign exchange crisis and financial crisis in the past, Korea’s soundness in the areas of foreign exchange and liabilities has been drastically improved. Among other things, various measures taken to stave off any sudden influx or outflow of capital in the wake of the financial crisis are functioning to enhance the health of the foreign exchange sector. 

The foreign exchange reserves of Korea have increased by more than 20 percent from that of three years ago, exceeding US$300 billion. The proportion of short-term foreign debt in the total is on the decrease, which is yet another good sign indicating improvements in the structure of foreign debts.

Following the outbreak of the financial crisis, the current account balance has continuously remained in the black on the strength of the upswing in the export industry.

This is largely because exports to the newly emerging markets have markedly increased over the past decade, which was made possible thanks to great efforts of domestic firms to diversify export markets. In 2001, export to emerging nations stood at 51 percent. However, it has now increased to 73 percent.

At a time when the economy of many advanced nations remains sluggish due to the recent crisis, it is a relief that our nation has succeeded in diversifying its export markets with the focus on emerging markets, which are performing relatively well.

In the midst of a truly daunting economic situation in the fourth quarter, Korea’s trade volume is expected to reach US$1 trillion, if it does well to the end. This will be a very meaningful and proud milestone in our history.

International organizations are also putting forth very positive appraisals about our nation’s economic conditions. Last year, an international credit rating agency, Moody’s, upgraded Korea’s sovereign credit rating by a notch.

Of course, we should never be only guided by numbers or past experiences and should never let our guard down or become complacent. It is necessary for us to pay extra attention to make sure that the recent economic crisis does not trigger downturns in the financial market and the real economy. 

When it comes to the economy, the psychology of the people also matters, indeed. Some people refer to the recent crisis as a crisis of confidence. In order to overcome this crisis of confidence, we need to have confidence in ourselves.

The Government will follow the domestic and external economic situation with watchful eyes and will put special emphasis on ensuring fiscal and external financial soundness.

The Government’s emergency economic system was reactivated last week, and the government-private sector consultative meetings will be held regularly in order to review the economic and financial developments.

Attention will be given particularly to developments in the Korean and international financial markets. Response systems for various crisis situations will be examined thoroughly. The authorities will take necessary measures in a speedy manner and prepare for the possibility of the crisis situation being prolonged.

We will also look after competitive small and medium-sized enterprises so that they will not be adversely affected by lack of funds. Support for microbusiness owners and small-scale self-employed people as well as low-income and other vulnerable people will be strengthened.

In formulating next year’s budget, priority was given to stabilizing the lives of low-income families through creation of jobs.

It is fortunate that the employment rate has been improving since the beginning of the year. But the budge plan stipulates 2 trillion won for bolstering employment through four major programs, including creation of opportunities for young people to start businesses and arranging jobs for high school graduates.

The welfare budget has been increased the most in history. Support has been expanded for low wage earners and recipients of basic living costs. Efforts will also be made to reduce the blind spots in the welfare system.

The Government hopes that job creation, welfare payments and economic growth will activate a virtuous cycle, inspiring low-income families.

 Fellow citizens,

It would not be desirable for the nation to be overwhelmed by a crisis mentality. On the other hand, we do need to be conscious of the crisis situation, realize the stark reality, and get ready to cope with any circumstance. Nevertheless, we should not lose our sense of balance.

During the 1970s, we experienced oil shocks twice. In 1997, we suffered a foreign exchange crisis. In 2008, there was a global financial crisis. But the nation has coped with all these and other hardships wisely. In fact, Korea is known internationally as a country that overcomes major crises in the most exemplary fashion.

Whenever the nation is faced with major difficulties, I am reminded of the great Korean people with pride and gratitude for what they have overcome. I believe in the potential of the Republic of Korea that becomes even stronger in times of crisis.

I trust that the Government, business, labor and all citizens will join forces as one and exercise collective wisdom. My Administration will do all it can to that end.

Thank you very much.