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An economic report card six months into the Lee Jae Myung administration

Published: 26 Dec. 2025, 00:02

Lee Sang-ryeol

The author is a senior editorial writer at the JoongAng Ilbo.

Six months have passed since the launch of the Lee Jae Myung administration.

Setting aside tariff negotiations with the United States, three features have stood out in economic management over the past half year. The government has deliberately loosened fiscal policy, including 13 trillion won ($8.99 billion) in consumption coupons. It has increased the burden on businesses through measures such as the so-called Yellow Envelope Act and revisions to the Commercial Bill. It has also imposed exceptionally tight controls on real estate transactions, most notably through the Oct. 15 housing measures.

The economic conditions reflecting these policies are far from encouraging. Consider the numbers.

Apartment buildings are seen from Mount Nam in Jung District, central Seoul, on Nov. 14. [NEWS1]

First, real estate. Apartment sale prices in Seoul, along with jeonse (lump-sum deposit) and monthly rents, have risen more sharply than during the Moon Jae-in administration, when housing prices surged nationwide. From January through November, apartment sale prices climbed 8.04 percent, the highest annual increase in 19 years. Even after the ultra-tight Oct. 15 measures, prices jumped 1.72 percent month on month in November, the biggest increase in more than five years. Jeonse listings have shrunk sharply, while the annual rise in monthly rents exceeded 3 percent this year, reaching 3.29 percent through November.

Second, the exchange rate. The won-dollar rate has climbed steadily from around 1,360 won in early June, when President Lee took office, breaking through the 1,450-won level in November. This is the first time such a move has occurred outside a crisis. The rate surged past 1,480 won before retreating below 1,450 on Dec. 24, following the government’s announcement of tax relief on capital gains from overseas stock investments by retail investors. The sharp depreciation has pushed up consumer prices for imported goods such as gasoline and food, while companies dependent on imported raw materials and components have come under mounting pressure.

Third, jobs. The youth employment situation is particularly severe. The employment rate for those aged 15 to 29 has declined for 19 consecutive months, standing at 44.3 percent in November. As of that month, about 1.6 million people in their 20s and 30s were either unemployed, preparing for work or classified as “resting,” accounting for 12.7 percent of that age group. The number of people in their 20s and 30s who have given up job searches altogether and are simply “resting” reached 719,000, the highest since such data were first compiled in 2003.

The Lee administration emphasizes its competence. Yet the six-month economic report card is grim. Economic indicators do not lie. Housing prices have surged, the exchange rate has jumped and jobs are scarce. These outcomes point to serious problems in economic management.

First, there are flaws in business policy. The Kim Dae-jung administration, a progressive government, overcame the Asian financial crisis, and the conservative Lee Myung-bak administration navigated the global financial crisis. They shared one common approach: an all-out effort to support businesses. Under the current administration, however, reviving companies is not a top priority. Labor unions and shareholders are placed ahead of firms themselves. The Yellow Envelope Bill and amendments to the Commercial Act reflect this orientation, as does the increase in the corporate tax burden.

Second, real estate cannot be stabilized through demand suppression alone, particularly through tighter lending. Liquidity in the market remains excessive. The more authorities try to rein in housing through loan restrictions, the more they benefit cash-rich buyers, deepening asset polarization. Transaction controls such as land purchase permits have reduced jeonse and rental supply, leaving ordinary renters and the housing-insecure to bear the cost. Accelerating housing supply more decisively is essential.

Third, at the heart of the exchange rate problem lies a gap between government and market perceptions. The trigger was tariff negotiations with the United States. Markets grew concerned about a shortage of dollar supply as Korea faced the prospect of investing $20 billion a year in the United States for a decade. The government underestimated these concerns. Some also question whether foreign exchange reserves, which stood at $430.6 billion in November, are sufficient. With U.S. interest rates higher and U.S. stock returns stronger, expectations of rising dollar demand and further won depreciation have taken hold. Only when confidence grows that Korea’s corporate competitiveness will improve and investment returns will rise, backed by trust in economic policy, will capital outflows ease and the exchange rate stabilize.

The won-dollar exchange rate is displayed on an electronic board at the Hana Bank dealing room in Jung-gu, Seoul, on the afternoon of Dec. 23. In the Seoul foreign exchange market, the won closed at 1,483.60 per dollar. [NEWS1]

Fourth, populism cannot rescue the economy. It is cosmetic at best. The 13 trillion won in consumption coupons failed to meaningfully boost spending while draining public finances. Loose fiscal management only fuels instability in prices and interest rates.

One could argue that six months is too short a period to judge an administration’s economic performance. But if the underlying philosophy and direction of economic management are flawed, improvement will be difficult. Above all, the government must demonstrate genuine commitment to economic recovery. Breaking with heavy-handed market controls, labor favoritism and populism is the necessary starting point.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.