[Column] Why the Economies of Korea and France Differ Amid 'Government Turmoil'

This is a story from an acquaintance, Mr. A, who lives in the heart of Paris, France. For a while, the area in front of his house was noisy due to protests filled with Molotov cocktails and spray paint, but now things have returned to normal. Even when he occasionally hears political news, he just thinks, "The politicians are arguing again," and moves on. Looking at the market, the stock market is on the rise, and bonds have stabilized.

Hearing this, one might think that France is running smoothly without major issues. However, like us, France has been plunged into unprecedented political turmoil since early December. On the very next day after President Yoon Suk-yeol declared martial law, on the 4th, the parliament passed a vote of no confidence against Prime Minister Michel Barnier, causing the cabinet to collapse for the first time in 62 years. If the chaos does not subside within the year, a 'shutdown' of public administration could occur.

Nevertheless, the French economy and financial markets seem largely undisturbed. The French economic newspaper Les Echos reported on the 5th, "There will be no panic in the stock market. Quite the opposite," adding, "The CAC40 index, which had been rebounding for a week, rose 0.37% to 7,330.54 points the day after the no-confidence vote."

This is interpreted as a sign that 'trust' in the government and parliament remains. Mr. A said, "The probability of a government shutdown is extremely low, and most people know it won't happen," adding, "If the situation worsens, citizens will protest, but for now, they are choosing to trust the government and parliament." Mr. B, who works at a United Nations (UN) agency located in the European Union (EU), also said, "People around me seem less interested than expected, expecting the French parliamentary issue to be resolved quickly," and added, "Foreign media also believe that French President Emmanuel Macron will swiftly appoint a new prime minister who can better cooperate with the opposition."

Unlike France, our government and National Assembly appear to have completely lost trust. The market is moving accordingly. Following the aftershocks of martial law, with soaring exchange rates and a sharp drop in stock prices, the impeachment failed last weekend due to ruling party lawmakers' absence from the vote, leading to a 'Black Monday' on the 9th. After President Yoon announced a planned national address on the morning of the 12th, concerns about a 'second martial law' arose, causing the KOSPI and KOSDAQ indices to fluctuate again.

Of course, each country has different circumstances and variations in power and political systems. However, it is significant that the level of trust citizens have in their government and parliament during a national crisis affects the degree of market turmoil. Is our political sphere currently trustworthy? The market will only regain trust when those who have lost confidence step down from power.