As President Yoon Suk-yeol’s administration reaches its midway point, the Ministry of Economy and Finance released a press release on “major achievements in the economic and fiscal sectors,” claiming that the government minimized the impact of the global economic crisis through price stabilization, job creation, and export promotion. The release was filled with positive assessments, touting the successful management of household and national debt and the revitalization of the economy through private-sector-driven policies. However, it was at odds with the economic reality felt by the public.
According to a Gallup Korea poll last week, President Yoon’s approval rating fell to a record low of 17%, the lowest since he took office. While issues related to first lady Kim Keon-hee (19%) were the top reason for disapproval, dissatisfaction with “the economy, livelihoods, and inflation” (11%) also stood out. Earlier in April, polls around the general election period showed that criticism of economic conditions, livelihoods, and inflation was overwhelmingly dominant, reflecting the public’s growing discontent.
The Yoon administration implemented tax cuts as its flagship policy to promote growth but has yet to see tangible economic benefits, with falling tax revenues being the most prominent outcome. The economy grew by just 1.4% in 2023, the first year of Yoon’s budget, lagging behind Japan’s 2.0%. This year, despite strong export performance, heavy household debt has hindered domestic consumption, resulting in a mere 0.1% quarter-on-quarter growth in the third quarter, further deepening stagnation.
The Ministry of Economy and Finance claims it pursued “responsible fiscal management to enhance sustainability,” but this falls short of sound fiscal policy. Populist spending on increases in basic pensions, child benefits, and soldiers’ salaries, without considering tax revenue, led to a 56 trillion won shortfall last year and another 30 trillion won gap this year. The government even took the unprecedented step of diverting 20 trillion won from the foreign exchange stabilization fund bonds to plug the deficit. This year, it is again tapping into various funds to cover revenue shortfalls. As a result, with next year’s budget reflecting a 78 trillion won deficit, the Yoon administration will have added 210 trillion won to national debt in three years, which is not much different from the Moon Jae-in administration’s addition of 400 trillion won over five years.
The Yoon administration claims to uphold market principles, yet it froze electricity rates despite rising costs, worsening Korea Electric Power’s debt—a clear case of populism. It fuels a real estate bubble by easing policy financing on one hand while pressuring banks to restrict lending on the other, showing that state-controlled economic intervention is still at play. The government should stop its self-praise and confront the economic reality, using it as a foundation for policymaking. Empty self-praise will convince few.
