Seoul: In a significant policy speech today, President Lee Jae Myung declared that South Korea’s economy has “turned a corner,” noting improving sentiment, stronger corporate performance and easing risk-factors that had weighed heavily on the nation’s growth prospects.
Addressing the National Assembly as part of his annual budget presentation, President Lee highlighted signs of renewed confidence in South Korea’s economy, noting that consumer sentiment is improving and the economy expanded by 1.2% in the third quarter of 2025 its strongest pace in six quarters. He declared that the nation has moved “out of crisis status,” referencing the government’s sustained efforts over the past five months to overcome what he described as a “severe economic crisis caused by the illegal martial law.”
Economic Outlook and Market Confidence:
Lee attributed the improved outlook to a reduction in both external and internal risks. He pointed out that geopolitical tensions and corporate governance concerns long-standing factors that had dampened foreign investor confidence are now easing. The president further noted that the benchmark stock index, KOSPI, has risen above the 4,000 mark, underscoring a renewed sense of market optimism.
Turning to fiscal policy, the president unveiled a significant expansion in government spending for the upcoming fiscal year. He proposed an 8.1% increase in the national budget, bringing the total to ₩728 trillion (approximately US $512 billion) a sharp rise compared with the 2.5% growth in the 2025 budget. This investment, he said, will target strategic growth sectors such as artificial intelligence, cultural and entertainment industries, shipbuilding, and semiconductors as part of a broader economic transformation agenda.
Challenges and Caution:
Lee’s upbeat remarks come against a backdrop of lingering economic challenges, including weak domestic demand, export pressures from shifting global trade dynamics, and persistent investor skepticism related to governance and regional instability. While the administration seeks to sustain growth momentum through expansionary fiscal measures, experts have cautioned that the true test will lie in the durability of this recovery.
Economists suggest that maintaining this growth trajectory will require balanced export performance, stable inflation, and effective implementation of the increased public expenditure. The success of the targeted growth sectors especially in technology and manufacturing will determine whether the government’s optimism translates into a long-term structural shift.
In essence, President Lee has framed the current economic moment as a pivotal turning point for South Korea a transition from crisis management to recovery. His ambitious fiscal and industrial policies are aimed at steering the nation toward sustainable growth, but the coming quarters will reveal whether this optimism can be transformed into enduring economic strength.