[Start Economy] "Gold Cabbage" that appeared in the National Audit Office...The common people's "sickness" due to high vegetable prices.

■ Host: Anchor Lee Jung-seop, Anchor Cho Ye-jin
■ Starring: Professor Heo Jun-young, Sogang University's Department of Economics

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information. Please specify [YTN News START] when quoting.

[Anchor]
We deliver the economic news quickly and kindly. Start Economy, today with Professor Heo Joon-young of Sogang University's Department of Economics. Welcome, professor. I'm always curious about what lawmakers will bring at the parliamentary audit, but cabbages have appeared. The National Assembly of the Ministry of Agriculture and Forestry was held yesterday, and I think it's because the price of cabbage has risen a lot.

[Heo Joon-young]
Looking at it, the ruling party lawmaker rebuked me. Usually, you would be very supportive of government policy, but you raised this issue. I think it's a very bad situation. In fact, there was Chuseok at the end of last month, and during Chuseok, the price per head of cabbage was a little more expensive than now. Now, it was 8,000 won per waiver.Ma was over 9,000 won at the time. Nevertheless, is the price of cabbage cheaper, which is down to about 8,700 won, then it is up 30% compared to the previous year, so the kimchi-making season begins in earnest in November. Then, in the end, I think that the price of cabbage and the burden of these things are accumulating.

[Anchor]
Compared to the average price of this cabbage soaring to nearly 10,000 won, it has fallen to the 8,700 won level for four consecutive trading days. Can it be said that importing Chinese cabbage has been effective?

[Heo Joon-young]
However, it may not have worked, but the question of how effective it was will remain. Because the government said it would import about 1,100 tons, but the situation in China is not so good that it will be about 250 tons in October and the rest in November. Even if it's 1,100 tons, it's enough to digest in the agricultural and fishery markets such as Garak Market in a few days. Then, in terms of the quantity itself, it may not be very large. However, I think there can be pros and cons to this. In the case of advantages, there seems to be a part that gives a little breathing room to supply and demand, but rather, how much cabbage prices have risen, it imports even from China, and through this, there must be a part that stimulates consumers' fear of golden cabbage. From what I've heard, cabbage will be shipped in earnest in November. It is said that the weather of the remaining days is very important. So, it's cool like now, but when it rains sometimes, the area of cabbage cultivation for cabbage agricultural products has decreased compared to last year. However, considering the number of leaves attached to each cabbage as a whole, there are talks from agricultural officials that the supply and demand will improve in November this year.

[Anchor]
There are more and more people joining the ranks of golden cabbage and golden vegetables, and you need radish when you make kimchi. The price of radish has soared a lot compared to the previous year, so I think citizens will be worried when they make kimchi.

[Heo Joon-young]
Even if you make a lot of radish kimchi and cabbage kimchi, it contains radish, but anyway, the retail price has increased by 50% compared to last year. Then the price of cabbage is 30% higher than last year, and then radish is 50% higher. And recently, the price of salted fish, sugar, and various condiments has risen a little, and from this point of view, you can even think that it would be better to buy kimchi than to make kimchi at home. So the price of eating out has risen so much that I tried to do something at home, but it seems that it's not easy to cook at home or cook at home.

[Anchor]
Anyway, even if we expect this price to be set sooner or later, wouldn't there be these phenomena of the climate crisis every year? Don't you think we need a fundamental measure?

[Heo Joon-young]
I think we need to look at some structural problems. Of course, this is not a problem that can be solved in a day or two, but when we compare it to other OECD countries, the area of crops is the last in terms of population. Next, the proportion of small farms is the highest. In that sense, productivity is low because there are many small farms, and the proportion of arable land is also narrow in the country, so there must be a limited part because there are many mountainous areas. It's something that you can say that you've been doing very well, and you've been doing well even in a small area. Then you might think that it is okay to import, but the proportion of imports in Korea is also lower than in other countries. In the end, imported products are of such good quality, so we can't completely replace your preference for domestic products, but in the short term, it will be important to secure reliable and guaranteed imports among imports. In the mid- to long-term, I think we need structural changes to climate change and things that are too small compared to arable land. Another thing I want to tell you is the distribution ratio. Distribution costs account for the proportion of retail prices, which was 39% in 1999 and has risen to 50% recently. In that sense, rationalizing the distribution structure will certainly help stabilize prices.

[Anchor]
I think it's a part of paying a lot of attention to the primary industry. Among the next topics of the parliamentary audit, the Ministry of Land, Infrastructure and Transport conducted a parliamentary audit, and Minister Park Sang-woo expressed his opinion that stability can be maintained in the future regarding housing prices. What do you think?

[Heo Joon-young]
This is the case in terms of housing prices nationwide. Although it appeared on the news tip earlier, the rise in Seoul and the metropolitan area has slowed down anyway, but the rise is still continuing. The province continues to decline, so if you average this, it seems to be a situation that is roughly stabilizing. Nevertheless, if you think about why house prices are important, for example, people who have jobs in Seoul go to Gyeonggi-do without living in Seoul, so there may be a part of them moving away from work, and the polarization of house prices that cannot enter the area they want to live in in Seoul continues, right? There seems to be not a lot of fundamental things that have been solved in these areas. Where are we going to look? If you're going to look at the house prices across the country, it's stabilizing on average. However, the upward trend is still continuing in Seoul and the metropolitan area, so I'm sure there will be anxiety about this. And in recent years, there have been a lot of new construction, such as Dunchon Jugong, but if you look at it now, new construction will begin to become very rare from next year, near Seoul. In the end, these seem to be the kind of atmosphere that increases the burden on end-users for future housing prices.

[Anchor]
Is there any measure to solve this polarization of housing prices?

[Heo Joon-young]
In the end, if you think about why local housing prices will fall, you can ask two questions, but the first one is that jobs and such are insufficient in the end. According to recent research results, those who move to Seoul from the provinces usually get higher treatment for things such as annual salary, but those who go to the provinces from Seoul tend to go down mainly due to poor treatment. In the end, the lack of good jobs is the problem of the provinces. As a result of the outflow of population, the lack of demand for homes eventually seems to be a big problem in the provinces, so this seems to be related to what perspective of the entire country will be developed. Another thing is that there seems to be a disagreement on whether the boom in local housing prices will come again, where local housing prices can rise again. In recent years, this could be a trend downward trend. Because recently, there are people around me who are working in the provinces, but their hometown is Seoul, so I thought it would be better to rent a house here and buy a house in Seoul. Then, in the end, these things seem to be related to the development of the country and which parts can develop.

[Anchor]
In addition, one of the things that greatly affects real estate is related to interest rates, and the Monetary Policy Committee will decide the base rate on the 11th. Interest rate cuts, market experts seem to be looking forward a lot, what do you think?

[Heo Joon-young]
I'm also judging that I've been leaning toward lowering interest rates recently. Anyway, I think it's time to cut interest rates because domestic demand is too bad. Then, can't you give the wrong signal to the real estate market? In that respect, I think there may be such a statement. Even if interest rates go down by 0.25 there is a high possibility that this will not be a situation where interest rates will go to low interest rates or a very fast rate cut. I think there will be a little bit of a hawkish rate cut.

[Anchor]
I see. We will wait and see the BOK's decision. What was interesting about this morning's news was that I saw the titles of Chanel, Dior, Gucci, and Hermes when I bought an apartment. What is it about?

[Heo Joon-young]
Local apartments have not been sold, so there are many unsold houses after completion, and about 70,000 unsold houses are piled up nationwide, 80% of which are local. It's related to what I said earlier when that happened. In the provinces, you can get a generous product if you buy an apartment that can attract consumers, or you can get interest-free benefits for the middle payment. These packages are coming out, but in the end, local apartments and local housing prices are very weak right now, or supply is high.

[Anchor]
But if unsold houses continue to be maintained in provincial areas, won't it hurt construction companies a lot?

[Heo Joon-young]
Now, if you think about it, we say that real estate PF is the detonator of our economy, but the problem with real estate PF is that PF is the problem, centering on non-residential areas in the provinces. In the end, there are areas where local construction companies in this area, small and medium-sized securities companies in this area, and various companies in this area can be problematic. Could there be a dramatic twist on these parts? When can it be? One is that interest rates go down at a very fast rate, easing the burden of interest rates on these areas, and I think interest rates are not expected to go down very quickly due to various circumstances, so as a result, we have to wait and see.

[Anchor]
I see. Let's move on to the next topic. Samsung and LG Electronics are announcing their preliminary results today, and we told you the news earlier, but Samsung Electronics seems to be losing steam these days. How do you view it?

[Heo Joon-young]
I had a good idea about Samsung Electronics' performance until recently, but don't we do a lot of memory semiconductors? There is one of the three major companies called Micron called Canaries of Memory Semiconductors. The third quarter's performance came out, and it came out very well. So I was thinking that the overall performance of memory semiconductors was bad, but the problem is that in the case of Samsung, I compared it with SK Hynix. It's a memory semiconductor that goes into AI, like an HBM called high-bandwidth memory. SK is already supplying this to Nvidia, but in the case of Samsung, there is a meeting about this because there is a story that it has not passed the test yet. Then, why is a high-end semiconductor called high-bandwidth memory so important among memory semiconductors? This is because the rest of the memory semiconductor sector is getting worse now. Demand for PCs and smartphones is weakening. The price is also going down. In that regard, there seems to be an atmosphere in which Samsung, whose business is currently being driven intensively in these areas, is not a problem.

[Anchor]
Since the supply rate of home appliances and IT itself is so high in the past, there must be a lot of concerns about the marketability of this area, but the stock price has fallen a lot because of the lower expectations of Samsung Electronics. In the past, it was said that 100,000 electrons would be gone, but in the middle of the day, 50,000 electrons and half were also taken, so how will this trend be maintained in the future?

[Heo Joon-young]
In my view, the momentum of a big rebound is that, as I said earlier, Samsung Electronics passed Nvidia's qualification test and now it is called high bandwidth memory, and in a way, there may be momentum for a rebound if these things are created that can be re-entered as parts exclusively supplied by SK Hynix. The semiconductor cycle itself, especially the memory semiconductor cycle itself, is usually about a year to a year and a half, but I think the cycle started at the end of last year. Then, in a way, I think it can be seen as a situation where the cycle is at the back of the memory semiconductor itself. In that respect, Samsung is waiting for good news, but there must be some difficulties and some doubts in the market.

[Anchor]
Next, let's look at the New York Stock Exchange. All three major indexes closed lower.

[Heo Joon-young]
The risk from the Middle East is slightly increasing. Another thing is that the employment index in the U.S. recently came out, and it came out better than I thought. There are too many jobs, so long-term government bond rates, including the 10-year Treasury note, are rising again, reflecting the idea that the Fed will not be able to cut interest rates quickly. I think the market is disappointed in that situation. Regarding those areas, I think that they have entered a little adjustment phase recently.

[Anchor]
I see. So far, today we were with Professor Heo Jun-young of Sogang University's Department of Economics. Thank you for talking today.