[Inside Chodong] The Election Clock Is Ticking in Government Circles Too

This year, plans to interview Na Kyung-won, the Vice Chairperson of the Low Birthrate and Aging Society Committee, fell through. This happened after she suddenly brought up the Hungarian-style low birthrate policy idea, which led to severe conflicts with the Presidential Office and her abrupt resignation just three months after her appointment. Na’s unexpected remarks were clearly politically motivated. When asked, the Ministry of Economy and Finance said that the Inter-Ministerial Task Force on Population Crisis Response, which serves as the control tower for population risk, opposed the Hungarian model, stating that it is difficult to guarantee effectiveness relative to the budget input.

One wonders if this series of events would have occurred if there were no 22nd National Assembly elections on April 10 next year or the People Power Party’s party convention on March 8, which involves nomination rights. Whether the Hungarian model, which offers debt forgiveness for having multiple children, will effectively raise the birthrate remains uncertain at this point. However, in the process, ‘policy’ was sidelined in the nation’s fate-critical low birthrate and aging countermeasures. Ultimately, it devolved into a political struggle over President Yoon’s influence, and the issue was settled after Na stepped down with her head bowed.

The election clock is ticking in government circles as well. There is much speculation about who will run or who will be nominated from central government ministries. The re-election of Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, who has a strong foothold in the Daegu Dalseong-gun constituency, is being taken as a given, and rumors about high-ranking officials from economic-related ministries being drafted continue. For some, it is a waiting period to switch status from civil servant to member of the National Assembly.

A central government official I recently met said, “There is a reason why the economic crisis has been emphasized unusually since a certain point last year.” Looking back, after President Yoon Seok-yeol mentioned a ‘complex crisis’ at the Emergency Economic and Livelihood Meeting in October last year, the intensity of crisis rhetoric increased not only among Cabinet members but also across ministries. Some view this as a strategic move to gain cooperation from the opposition party (the Democratic Party) in the National Assembly. Conversely, it could be framed as ‘the opposition party is obstructing despite the severe economic difficulties.’ This calculation aims to direct blame at the opposition for repeated failures to pass various bills related to current issues in the National Assembly.

Meanwhile, the ‘heating bill bomb’ issue has emerged, and the opposition party immediately pulled out the 30 trillion won supplementary budget card, setting the stage for the February extraordinary session of the National Assembly to escalate into a power struggle among parties with the general election in mind. The government, which is betting everything on legislating fiscal rules during this session, is deeply anxious. Last week, Deputy Prime Minister Choo bluntly told reporters, “(The supplementary budget proposed by the opposition) is not being considered at all. It does not even align with the ABCs of fiscal management,” foreshadowing difficulties during the bill review process in the National Assembly.

Unless there are major variables like COVID-19 or the Russia-Ukraine war, the government and many national institutions forecast that our economy will show a pattern of low growth in the first half and higher growth in the second half this year. The slogan ‘economic team overcoming the complex crisis’ is unlikely to harm the ruling party’s support ahead of the general election.

The problem lies in the current state of our economy, which is sending warning signals from multiple fronts. The GDP growth rate in the fourth quarter of last year was -0.4%, marking the first negative growth in 10 quarters since the second quarter of 2020 (-3.0%). This is due to reduced private consumption amid high inflation and high interest rates, as well as sluggish exports, which are the mainstay of our economy. The trade balance has been in deficit for 11 consecutive months since the start of the new year, and the accumulated public utility bills suppressed by the previous administration are returning like boomerangs. When politics overwhelms the economy excessively, a backlash is inevitable.