[New Year Outlook from Ruling and Opposition Economic Experts] "Political Uncertainty Must Be Resolved, and Competitiveness Enhanced"

Sanghoon Kim, Eonju Lee, Jeonghun Jo, Seongguk Hong Economic Outlook
Trump's Second Term Administration Launch: Both Crisis and Opportunity
Structural Reforms Needed Across Industries Including Manufacturing

“Resolving Political Uncertainty” and “Preparing for U.S. Protectionism” to Enhance “Industrial Competitiveness.”

On the 2nd, Asia Economy summarized the diagnoses of four economic experts from both ruling and opposition parties in an interview to mark the new year. They forecast that 2025 will be a challenging year, emphasizing the importance of political stability domestically and responding to the launch of Donald Trump’s second term internationally.

Kim Sang-hoon, chairman of the People Power Party’s Policy Committee, who oversees the ruling party’s policies, said, “Political uncertainty and confusion must be resolved so that politics does not hinder economic growth.” Chairman Kim predicted, “If political uncertainty prolongs, there is concern about downward pressure on economic growth. However, if the unstable situation is short-lived and economic agents firmly recognize that it will be resolved in a predictable direction, the impact on the real economy will be limited.” Despite the economy being shaken by rapidly changing political situations last month, such as the declaration and lifting of martial law and the impeachment motion against President Yoon Seok-yeol, he believes that moving toward a predictable situation can reverse the mood.”

Lee Eon-ju, a senior member of the Democratic Party and former businessperson, also cited resolving political uncertainty as the top priority. Lee said, “With the appointment of two constitutional court judges, the impeachment process will proceed, and if the investigation into the internal rebellion accelerates, national governance can stabilize,” urging, “The government must also devote all efforts to managing the situation.” Hong Sung-guk, chairman of the Democratic Party’s National Economic Advisory Council, expressed concern, saying, “Even if President Yoon is impeached, political instability will increase until the early presidential election is held in the first half of this year,” and “Due to the internal rebellion and impeachment, companies will postpone investment decisions.”

Economic experts from both ruling and opposition parties also emphasized the need to respond to the launch of Trump’s second term. While there are risks, some also see it as a potential breakthrough.

Jo Jung-hoon, a People Power Party lawmaker who worked as an international economic development expert at the World Bank for 15 years, stressed, “We must communicate closely with the U.S. to ensure that regulations on allies such as Korea are not simultaneously tightened.” He also expressed hope, saying, “Once the new trade order is established and tensions in Ukraine, the Middle East, and the Taiwan Strait stabilize, the global economy will stretch and recover.”

Senior member Lee argued, “As the global trend moves toward ‘nationalism,’ Korea must find ways to increase domestic investment in preparation.” He added, “If President Trump takes office, the Russia-Ukraine war is likely to end. Since Russia and Korea have complementary industrial structures, we should restore relations with Russia to expand the market.”

Amid significant concerns about this year’s economic outlook, calls to strengthen industrial competitiveness centered on manufacturing continued.

Chairman Kim of the Policy Committee said, “The economic growth rate is expected to reach 2.0% this year,” and stressed, “It is urgent to pass laws for the country’s future growth engines.” He urged, “Future livelihood bills such as the Semiconductor Special Act, the Special Act on Expanding National Agency Power Grids, the High-Level Radioactive Waste Disposal Act, and the Offshore Wind Power Act, which were not passed by the end of last year due to some disagreements between the ruling and opposition parties, must be handled as soon as possible.”

Senior member Lee also agreed on the need to pass the Semiconductor Special Act. He suggested, “The government should proactively intervene in strategic industries through tax support, subsidies, and support for water infrastructure.” He also mentioned the need for a “Power Grid Support Act” to back Lee Jae-myung, the Democratic Party leader’s flagship pledge of an “Energy Highway.”

There was broad consensus on the need to find ways to strengthen competitiveness in manufacturing. Lawmaker Jo advised, “While the roles of semiconductors, electric vehicles, K-Defense, and bio industries are important, improving profitability in traditional manufacturing sectors such as petrochemicals, steel, and shipbuilding is essential.” He added, “To this end, support for corporate facility investment and structural reform must be expanded.”

Chairman Hong pointed out that a structural transformation must begin this year to revive the sluggish Korean economy. He also emphasized that politics should lead this role. He stressed, “Although these are recommendations for the economy, it is time to overhaul Korea’s overall structure, including education.”