The author is an editorial writer of the JoongAng Ilbo.
The Ministry of Economy and Finance’s announcement of its 2025 economic policy direction last week made for somber reading. The plan centers on four pillars: restoring livelihoods, maintaining international credibility, addressing uncertainties in the global trade environment and strengthening industrial competitiveness. The most pressing issues for Korea’s economy appear to have been included. The government plans to front-load the budget, with 40 percent of its 85 trillion won ($57.9 billion) livelihood program to be spent in the first quarter. Measures, such as additional tax deductions for consumption, a reduction in individual consumption tax on automobiles, and tourism coupons, evoke past efforts to stimulate domestic demand. Stable management of financial and foreign exchange markets is essential for maintaining international credibility, while the record-breaking 360 trillion won in trade financing support aims to counter the uncertainties of a second Trump administration and help diversify exports.
However, the uncertainty stemming from the martial law and impeachment crisis has inevitably pushed the government toward risk management. The momentum for four key reforms — labor, education, pensions and health care — has largely dissipated under the current administration. While addressing low birthrates, aging demographics and structural reform remains critical, these issues have garnered little attention. It is no surprise, then, that last year’s government efforts to address inequality have been left out of this year’s economic plan.
The government projects economic growth of 1.8 percent for 2025, below Korea’s potential growth rate and even lower than pre-martial-law estimates from the Bank of Korea (1.9 percent) and the Korea Development Institute (2 percent). Political instability has weighed heavily on the economy, creating a significant drag. Typically, government forecasts tend to exceed projections from domestic and international institutions, reflecting its policy ambitions. The fact that the government’s own forecast stands at 1.8 percent suggests achieving even this figure may prove challenging. The government’s decision to refrain from explicitly proposing a supplementary budget (extra budget) and instead pledging to reassess the situation in the first quarter likely reflects political disagreements between the ruling and opposition parties over the timing and scale of such a measure. Nevertheless, given the inevitability of a supplementary budget, tripartite discussions among the ruling party, opposition and government must begin without delay.
What the ministry may have wanted to include in its policy direction, but could not, might best be described as a “standstill.” In trade, a standstill refers to a freeze on additional protectionist measures, such as the G20 leaders’ agreement at the Washington summit in November 2008 to halt the imposition of new trade or investment barriers until 2013. In agriculture, it signifies restricting the movement of livestock, people, vehicles and goods during outbreaks to prevent disease spread. In the current political context, a standstill means refraining from actions that exacerbate uncertainty.
While I noted in a column a month ago that “the path to impeachment is uncertain, but it is at least a road we have traveled before,” I did not anticipate the severity of the president’s petty refusal to cooperate with investigations and arrest warrants, or the opposition’s reckless haste toward early elections.
Prime Minister Han Duck-soo, before his impeachment, lamented that the acting head of state wields the weakest authority among the legislative, judicial and executive branches. While his comment may have been an attempt to encourage bipartisan agreement on contentious issues such as appointing Constitutional Court justices, it ultimately came across as an abdication of responsibility, leaving him vulnerable to criticism. Han’s eventual impeachment underscores the perceptions around his inaction.
Now, acting President Choi Sang-mok, also deputy prime minister and finance minister, holds even less authority than his predecessor, who was confirmed by the National Assembly. Nevertheless, Choi has managed to keep the Constitutional Court’s impeachment proceedings alive by appointing two justices, despite criticism from both ruling and opposition parties. At a year-end cabinet meeting, Bank of Korea Gov. Rhee Chang-yong sharply rebuked Minister of Labor Kim Moon-soo, who opposed the justice appointments, saying, “Think before you speak.” For the central bank governor to make a rare political comment highlights the frustration with the current state of affairs.
The acting ㅔresident’s tenuous position must not be allowed to weaken further. Actions that heighten disorder, or “entropy,” must be avoided. Do not demand answers from acting President Choi that even you cannot articulate.
Translated using generative AI and edited by Korea JoongAng Daily staff.
