A low growth rate fuels a low birthrate

I hope to make 2024 a year where we overcome low birth rates and set a foundation for economic recovery.

KIM KYOUNG-HEEThe author is a business news reporter of the JoongAng Ilbo. “The younger generation in Japan doesn’t want the economic boom just like in the 1980s. More than half think now is better,” a professor at a Japanese university recently told me. Millennials and Gen Z are more afraid of the aftermath of rapid growth, as they have experienced the “lost 30 years” since the collapse of the bubble economy.

In a similar context, the biggest goal of Japanese unions is to maintain employment, not to raise wages. Rather than pursuing pay increases for themselves, they believe that creating an environment that enables other family members to make money will ultimately increase their households’ income. But if employment conditions worsen, we may see an increase in crimes committed by Hikikomori, or socially withdrawn people.

I could not dismiss this as another country’s problem. It seems to show how the repeated failures of economic policies can harm society. Japan’s younger generations are pursuing distribution and security rather than growth, probably as a result of painful lessons. After the bubble economy burst, Japan’s real economic growth rate was 0.8 percent for 20 years. Even during the Abenomics period, when economic policies reversed from distribution to growth, the real economic growth rate was only 0.9 percent.

Weighing on the Korean economy this year is the concern that the country could fall into a swamp of prolonged low growth like Japan. According to the Bank of Korea, the real GDP growth rate in the third quarter of this year was 0.6 percent. It was the third consecutive quarter with growth in the zero percent range, following 0.3 percent in the first quarter and 0.6 percent in the second quarter. The growth rate is expected to be 1.4 percent this year, and the goal for next year is 2.1 percent.

But other prospects are by no means rosy. The low birth rate and aging population, which put a burden on the economy, are progressing much faster in Korea than they are in Japan. Korea’s total fertility rate fell by a whopping 86.4 percent between 1960 and 2021. The drop is the steepest in the world. As life expectancy increases, Korea will become a senior society; more than 20 percent of the population is expected to be aged 65 or over in 2025.

At times like this, we must maintain the right attitude to cope with the low-growth crisis. The 1960s- and 1970s-style high growth, called the “Miracle on the Han River,” may be difficult, but we should still be wary of accepting low growth as our fate and falling into in a sense of defeat. In particular, the negative perception that my child will live a worse life than I have is the root of a vicious cycle that encourages low birthrates and solidifies low growth.

Therefore, for the time being, I want to believe in the power of infinite positivity. I hope to make 2024 a year where we overcome low birth rates and set a foundation for economic recovery.