Surging Oil Prices, Slowing Growth... Seeking Policy Solutions Amid a Multifaceted Crisis

[By Jeong-yoon Lee, Edaily] A sharp rise in energy prices and heightened financial market volatility triggered by the war between the U.S. and Iran are fundamentally shaking the global economy, including Korea. As surging oil prices, slowing economic growth, and mounting fiscal burdens face into a complex crisis, voices are growing louder calling for a comprehensive reassessment of fiscal, financial, and monetary policies.

Alan Auerbach, Professor of Economics at UC Berkeley, and Andrew Levin, Professor of Economics at Dartmouth College, who will speak at the “Edaily-PERI Special Symposium.”

Edaily announced on May 27 to host the “17th Edaily Strategy Forum” on June 16-17 under the theme: “The Age of Power, Recasting Civilization : Who Designs the New World?” As a key program within the forum, the “Edaily-Policy Evaluation Research Institute (PERI) Special Symposium,” scheduled for June 17, stands out as the forum‘s flagship program. The symposium is designed to explore policy responses for the Korean economy in an environment where uncertainty and disorder have fast become the daily norm.

The upcoming symposium focuses on the two core pillars of macroeconomic policy, fiscal and monetary policy, to diagnose the structural causes of today’s crises while seeking sustainable pathways for future growth. The event‘s central thesis reflects a growing consensus that fiscal and monetary policy tools are no longer merely instruments for short-term economic stabilization; they must now simultaneously secure economic sustainability and long-term growth foundations, making policy design more critical than ever.

The global economy has been facing rapidly mounting pressures since the outbreak of the U.S.-Iran war. Rising international crude oil prices are pushing up manufacturing and logistics costs, thereby fueling intense inflationary pressures worldwide, with some forecasts suggesting inflation in countries such as the U.S. could again approach the 4% range. Simultaneously, businesses are increasingly entering a “wait-and-see” mode, postponing investment and hiring, which in turn amplifies intensifying downward pressure on global growth.

Fiscal conditions are also becoming increasingly strained. Governments around the world are facing mounting pressure to expand public spending in response to economic slowdowns and mitigate energy shocks, while global debt levels have already risen to nearly 100% of global GDP. With growth slowing and fiscal burdens increasing, the world is confronting a highly restrictive “double constraint” structure.

Korea is also exposed to these global trends. Given its heavy reliance on energy imports, rising oil prices simultaneously driving up import prices and pressuring the USD/KRW exchange rate, leading to higher corporate costs and weaker domestic consumption. Combined with growth hovering around the 1% range and rapidly aging population, the burden on Korea’s fiscal and monetary policymakers continues to intensify.

The “Edaily-PERI Special Symposium” was organized against this backdrop. The Taxation and Fiscal Policy Session will be moderated by Il-ho Yoo Former Deputy Prime Minister for Economy. In the taxation and fiscal policy session, chaired by former Deputy Prime Minister Il-ho Yoo, Alan Auerbach, a distinguished Professor at UC Berkeley, present on “The Coming Fiscal Crisis,” outlining structural risks in global public finances and possible policy responses. Young Lee President, Korea Institute of Public Finance (KIPF), will dissect the current status and pending hurdles of Korea‘s domestic fiscal policy, leading into an extensive panel discussion involving lawmakers and academic experts to deliberate on the long-term sustainability of Korean public finance.

The Monetary & Financial Policy Session will be moderated by Yoon-jae Cho Former Member of the Monetary Policy Board, Bank of Korea. Andrew Levin, Professor at Dartmouth College and Jin-il Kim, Member of the Monetary Policy Board, Bank of Korea, will present on “ The Pitfalls of Consensus and the Merits of Robust Monetary Policy Debate” and “Monetary Policy in an Age of Uncertainty,” respectively. The session will conclude with a comprehensive panel discussion comprising experts from the National Assembly, academia, and international organizations on sustainable monetary and financial policy strategies capable of supporting long-term growth.

Chong-Bum An, President of PERI, stated, “This symposium will organically connect the two pillars of policy, fiscal and monetary policy.” He added, “In an era where uncertainty and disorder have become commonplace, ”the symposium will provide a meaningful platform to comprehensively examine the policy direction and strategic choices Korea must pursue going forward.“

“17th Edaily Strategy Forum” Poster