[Policy Pulse] Sustainable Growth Strategies to Surpass "Peak Korea"

Signs of Upward Momentum Emerge Everywhere
Must Ensure Growth Spreads Throughout Society
Inclusive Welfare Is Key to Major Transformation

Neung-Hoo Park, Former Minister of Health and Welfare

Recently, a sense of "upward momentum" has been detected in Korean society for the first time in a while. The KOSPI has reached the long-dreamed-of 5,000 mark, and the real estate market, showing signs of overheating, seems to be supporting consumer sentiment through the wealth effect. The global spread of K-culture and the presence of high-tech manufacturing, including semiconductors, are also solidifying Korea's position in the global supply chain. The "Peak Korea" theory from a few years ago-which claimed that Korea had reached the apex of growth and was heading into a long-term slump-now seems almost irrelevant, as positive developments continue to unfold, at least on the surface.

However, the underlying reality remains heavy. The number of young people giving up on marriage and childbirth continues to rise, and the trend of a fertility rate below 1.0 persists, while suicide rates and social isolation are not easily reduced. The concentration in the Seoul metropolitan area, which once drove productivity during industrialization, is now exploding the cost of living through soaring housing prices, commuting, and education expenses. The gap between large corporations and small and medium-sized enterprises has become entrenched as a dual structure in the labor market, and disparities in assets and opportunities are showing signs of becoming fixed across generations. Korea now stands at a crossroads: it may either slide into long-term stagnation or leap forward toward sustainable growth.

The Mirror of Japan and the UK: Similarities and Differences

Japan's "Lost 30 Years" demonstrates that even leading nations can fall into prolonged stagnation after the collapse of an asset bubble, trapped by financial distress and deflationary sentiment. The United Kingdom, after experiencing low growth, weakening competitiveness, and social conflict in the 1970s, went through a period of "relative decline," resulting in a diminished national standing. Korea shares warning signs such as the concentration of population and key industries in the capital region, an economy heavily influenced by asset prices, low birth rates and aging, and widening inequality due to the failure to spread the fruits of growth.

But there are also differences. Korea has a relatively faster pace of technological transition, a stronger digital foundation, and greater crisis response capabilities than Japan. Compared to the UK, Korea still has a solid manufacturing-based strategic industry and a faster rate of policy learning. The problem is that if these strengths are not connected to the foundations of everyday life, society could become "fast-moving but quickly exhausted."

Transformation for Sustainable Growth: The Role of Inclusive Welfare

The core of a national strategy for sustainable growth is not a prescription to boost short-term growth rates, but a paradigm shift in the very way growth is achieved. First, Korea must move toward a multi-core structure that eases the extreme concentration in the capital region. By fostering mega-regional hubs where businesses, universities, research, healthcare, and culture move together, Korea can create pathways for upward mobility outside the capital. Second, the rules of engagement must be refined so that the achievements of large corporations are more effectively shared with small and medium-sized enterprises and local communities, thereby raising the productivity of the entire ecosystem. Third, Korea must break the cycle in which asset market booms flow only into the consumption of certain classes and fail to translate into future investment, instead building circuits that reinvest in innovation, talent, and local regions.

The completion of this transformation depends on welfare. Care services and housing must be guaranteed as basic rights, and robust safety nets must be built for career transitions, retraining, and mental health. Welfare is not a reward after growth-it is the infrastructure that prevents long-term stagnation.

To go beyond "Peak Korea" is not to seek greater cheers at the peak. It is a proposal to build a country that maintains the speed of growth based on innovation without shifting the costs onto individuals, and where innovation does not remain the achievement of a few but spreads as the capacity of society as a whole. Sustainable growth cannot be achieved by technology and capital alone. Only when welfare, based on the value of inclusion, reduces the anxieties of life can Korea bypass long-term stagnation and advance as a true leading nation. Are we now properly envisioning that transformation?

Neung-Hoo Park, Former Minister of Health and Welfare