[New Year Economic Outlook by Ruling and Opposition Economic Experts] ② Lee Eon-ju "Exodus Crisis... Uncertainty Must Be Eliminated"

"Current Account Surplus Shrinks... Concerns Over Prolonged Slump"
"Manufacturing Restructuring Needed... Must Address Economic Hollowing Out"
Expressed Willingness to Pass Semiconductor Special Act and Power Grid Support Act

Lee Eon-ju, a top member of the Democratic Party of Korea and a former entrepreneur, predicted in an interview with Asia Economy on the afternoon of the 1st that South Korea's economic situation in 2025 will face a crisis. Lee forecasted that the domestic demand slump and the capital market exodus (mass investor withdrawal) crisis, which have continued since last year, will persist into the new year. She especially expressed concern over the loss of trust from foreign investors due to the December 3 emergency martial law incident last year, emphasizing that resolving political uncertainty is the top priority.

Lee Eon-ju, Supreme Council Member of the Democratic Party of Korea. Photo by Yonhap News Agency

Lee, a three-term member of the National Assembly who previously served as an executive director at S-Oil and as chief advisor at Renault Samsung Motors, currently heads the Future Economic Growth Strategy Committee and the Economic Situation Inspection Team of the Special Committee for Overcoming Internal Strife and National Stability within the Democratic Party.

Lee stated, "Although there is a current account surplus, the scale of the surplus is shrinking as export volumes slow down," adding, "Some analyze that we might be heading toward a long-term recession." Referring to the Bank of Korea's recent forecast of 1.9% economic growth, she said, "Except during past financial crises, foreign exchange crises, and the COVID-19 pandemic crisis, growth has never been in the 1% range," diagnosing that "the situation is very bad."

She also mentioned that the semiconductor industry is struggling and that legislative support is necessary to aid the industry. As a member of the National Assembly’s Industry, Trade, Energy, Small and Medium Enterprises Committee, Lee expressed her determination to pass the so-called 'Semiconductor Special Act.' She suggested, "The government must proactively intervene in strategic industries through tax support, subsidies, and water infrastructure support." Additionally, she said that a 'Power Grid Support Act' is needed to back the Democratic Party leader Lee Jae-myung’s flagship pledge of an 'Energy Highway.' The plan involves supplying energy to ultra-power-demand industries such as artificial intelligence by utilizing the Power Industry Infrastructure Fund.

As a mid- to long-term economic crisis response measure, she pointed to 'manufacturing industry restructuring.' She proposed, "We need to innovate existing manufacturing industries such as petroleum, chemicals, and steel in cooperation with the Ministry of Trade, Industry and Energy," aiming to shift toward high value-added products. She diagnosed that "partner companies and local small business owners in Yeosu and Gwangyang cities in Jeollanam-do and Pohang city in Gyeongsangbuk-do are seriously experiencing 'economic hollowing out.'" This highlights the regional economic problem where the employment share in manufacturing decreases while the service sector share increases. She said she plans to visit these areas directly in the new year or designate them as 'industrial crisis response regions' to take measures.

Regarding the launch of Trump’s second term, she evaluated it as "adding insult to injury" due to decreased predictability but also saw it as "an opportunity to turn crisis into chance." Lee stated, "As the global trend moves toward 'nationalism,' South Korea must find ways to increase domestic investment in preparation." She emphasized that if U.S. President Donald Trump takes office, the Russia-Ukraine war is likely to end, and "since Russia and South Korea have complementary industrial structures, we should restore relations with Russia to expand the market."