Growth Engine Cooling for Korean Economy... Experts Propose AI, Trade, and Investment Solutions

62% of Experts Predict 'Stagnation or Downturn' Over Next Five Years
New Administration Urged to Focus on Trade and Investment in First Year, Prioritize Advanced Industry Development Over Five Years
AI and Automation Technologies, Senior Employment, and Foreign Population Inflow Suggested as Policy Alternatives
Potential Growth Rate Could Reach Up to 2% with Successful Structural Reforms
"Government Sincere About New Industries, Urgent Need for Regulatory Shift and Infrastructure Investment"

Domestic economic experts have expressed concerns about the potential stagnation or decline of the South Korean economy over the next five years, and have identified trade strategies, corporate investment, and the fostering of advanced industries as key tasks for the new administration.

The Korea Chamber of Commerce and Industry conducted an online survey on the "Economic Policy Direction of the New Administration" among 102 experts in the fields of economics, business, and finance, and announced the results on July 10, 2025.

In this survey, conducted to coincide with the inauguration of the Lee Jaemyung administration, 61.8% of respondents predicted that the Korean economy would experience either an "L-shaped stagnation" (40.2%) or a "gradual downward trend" (21.6%) between 2026 and 2030. Only 34.3% expected a rebound in growth. The average economic growth rate forecast for this year was 0.88%, similar to the existing projections by the Bank of Korea and the Korea Development Institute (KDI), which stand at 0.8%.

Experts identified "revitalizing corporate investment" (69.6%) and "establishing external trade strategies" (68.6%) as the most urgent policies the new administration should pursue within the first year. As key priorities for the next five years, "fostering future advanced industries" ranked highest at 75.5%, followed by responding to low birth rates and aging population (58.7%), regulatory reforms (32.3%), and talent development (31.4%).

Joo Won, Head of Research at Hyundai Research Institute, stated, "Currently, the Korean economy lacks a leading industry that can invigorate the entire economy, as heavy and chemical industries or information technology did in the past." He added, "Both the government and the private sector need to accurately analyze technology and markets, and make strategic investments in the core areas of the AI industry."

As specific policies to foster advanced industries, respondents suggested focused investment in strategic industries (59.8%), expanding the adoption of AI technologies across industries (38.3%), and increasing support for private sector R&D and facility investment (25.5%). To address low birth rates and an aging population, improving labor productivity through innovative technologies such as AI and automation (63.4%) was most frequently mentioned, followed by policies for continued employment of older workers (56.4%) and expanding the inflow of foreign population (34.6%).

When asked how much South Korea's potential growth rate could improve if structural reforms succeed, 31.4% answered that it could reach "1.52%," and 26.5% said "1.15%." These figures exceed the KDI's projection for the potential growth rate in the 2030s (0.7%). KDI estimates that the spread of AI and structural reforms could raise the potential growth rate to as high as 1.1%.

Experts also shared their views on the identity of the new administration. The most common response was "a government genuinely committed to fostering new future industries" (21%), followed by "a government that transforms the economic structure" (16%), "a government that builds a private sector-led economy" (11%), and "a pragmatic government" (10%).

Song Uiyoung, professor at Sogang University, said, "There is a need for an industrial policy blueprint that lowers entry barriers in each sector and coordinates priorities and potential conflicts among support policies." Cho Sunghoon, professor at Yonsei University, emphasized, "We must learn from Japan's experience, where expansionary fiscal policy failed to drive real growth over the past 30 years. Institutional and regulatory system reforms are more important."

Kang Seokgu, head of the Research Division at the Korea Chamber of Commerce and Industry, stated, "The basic premises of the economy are changing due to technological revolutions, the reorganization of the trade order, and a decline in the working-age population." He added, "The new administration should actively address regulatory barriers and invest in new industry infrastructure from a structural perspective."