[2nd Anniversary of Yoon's Inauguration] ② People's Livelihood Economy Trapped by 3 Highs... Diplomacy and Security Half Success

Long-term Measures Needed for 'Price Stability → Economic Recovery'

[Image source=Yonhap News]

The Yoon Suk-yeol administration has promoted deregulation and tax reduction policies over the past two years, with 'free market economy' as its flagship. However, it failed to achieve clear results due to the political landscape of a 'minority government with opposition majority.' Facing an unfavorable macroeconomic environment characterized by high inflation, high interest rates, and high exchange rates?the so-called 'three highs'?the administration focused on responding to these challenges and thus could not present a differentiated economic policy stance.

In particular, prices soaring to the highest levels since the foreign exchange crisis have become a hidden obstacle that made the livelihood economy even more difficult. Over the past two years, inflation surged by 6.7%, deepening the hardships of everyday life, and the perceived economic conditions worsened especially among vulnerable groups. Although the administration aimed to prioritize the market economy, induce private investment, and create a structure where corporate revitalization would spread to households, these efforts fell short.

The Yoon administration’s maintenance of a 'sound fiscal' stance is positively evaluated. By raising awareness against the 'loose fiscal' policies of past governments and tightening the fiscal belt to limit the national budget deficit, including the introduction of fiscal rules and suppression of budget expenditure growth rates, it is recognized as an achievement that aimed for fiscal sustainability.

Recently, with oil prices falling, expectations for price stabilization have risen, and buoyed by strong exports, the first quarter GDP growth rate recorded a 1.3% 'surprise.' This has led to calls for urgent structural measures to sustain growth momentum. Professor Yoo Hye-mi of Hanyang University’s College of Economics and Finance said, "There were no notable economic pledges in this general election, and neglecting the economy was the cause of defeat. Since the importance of livelihoods has been reaffirmed, policy priorities in the second half of the year should shift to the economy, and mid- to long-term measures should be established to ensure that price stabilization leads to economic recovery."

Lack of Clear Economic Achievements... Need to Improve Hostile Inter-Korean Relations

Regarding the Yoon Suk-yeol administration’s diplomacy and security policies over the past two years, the assessment is a 'half success.' Strengthening the Korea-U.S.-Japan security cooperation amid increased geopolitical risks such as U.S.-China conflicts and the wars in Ukraine and the Middle East is considered an achievement, but relations with Russia, China, and North Korea have rather regressed. While strengthening a U.S.-centered diplomatic line is not inherently problematic, excessive distancing from China and Russia may cause new side effects.

Professor Kim Yong-hyun of Dongguk University’s Department of North Korean Studies said, "It is undesirable for the Korea-U.S.-Japan versus North Korea-China-Russia framework to solidify. Since China is very important in resolving North Korean issues, wisdom is needed to maintain the Korea-U.S. alliance and Korea-U.S.-Japan cooperation while also improving Korea-China relations."

Regarding the government's ongoing diplomatic stance as a 'global pivotal state,' the direction is correct, but there are calls for a substantive approach to realize it. In this regard, efforts to strengthen cooperation with Global South countries through the upcoming Korea-Africa Summit in June are positively evaluated. Professor Kang Jun-young of Hankuk University of Foreign Studies’ Graduate School of International and Area Studies said, "The direction itself is not a big problem as it means leading transnational issues without being fixated on North Korea or the four powers (U.S., Japan, China, Russia), but the issue is how to implement this."