Lee Jae-myung's first pledge as president was 'the economy.' In the short term, the export-driven economic system faced a crisis due to pressure from Trump-era trade policies, while the construction industry's downturn and weak consumer spending have further destabilized domestic demand. Long-term, growth momentum is weakening due to low birth rates and an aging population, and key industries that once boasted advanced technologies are losing competitiveness due to China's technological hegemony.
◇ Following his inauguration, activation of the 'Emergency Economy Task Force'… Lee emphasizes 'speed'
To overcome the economic crisis faced by Korea, President Lee Jae-myung stated that he would activate the 'Emergency Economic Response Task Force' immediately after his inauguration. During his campaign, President Lee noted that the Emergency Economic Task Force should quickly gather practical units to identify the short-term, mid-term, and long-term actions necessary to overcome current challenges, emphasizing that 'restoring livelihoods and the economy is more urgent than reform.'
The task of the Emergency Economic Response Task Force is to establish 'immediately actionable livelihood economic measures.' Discussions within the task force are expected to cover additional supplementary budgets for domestic recovery and responses to Korea-U.S. trade negotiations.
Real estate policy is also a point of attention. The Korea Development Institute (KDI) pointed to the sluggish construction industry as a key source of instability in the Korean economy in its report 'Economic Outlook for the First Half of 2025' released last month. It states that 'unsold housing units are surging, particularly outside the capital region, and housing transaction prices are showing a declining trend,' indicating a downturn in the housing market. The construction industry is closely linked to domestic demand, as it generates the greatest employment effects among single industries.
The Lee Jae-myung administration, which adopted 'livelihood recovery' as its slogan, is focusing its real estate policy direction on 'supply.' This contrasts sharply with the previous Moon Jae-in administration's approach of tightening the market with tax regulations such as the comprehensive real estate tax, acquisition tax, and property tax. Go Jun-seok, a professor at Yonsei University's Sangnam Business School, analyzed that 'the past Democratic Party administrations enacted policies centered on strong real estate regulations, but this time there seems to be no clear regulatory stance,' adding that 'the bigger variable in the current real estate market is whether interest rates will be lowered.'
Attention is also focused on the handling of the 'Commercial Act Amendment' and the 'Yellow Envelope Act' (Amendments to Articles 2 and 3 of the Trade Union Act), which were promoted by the Democratic Party of Korea but fell through due to President Yoon Suk-yeol's veto.
During the presidential campaign, President Lee promised to revitalize the stock market with plans to 're-promote the amendment of the Commercial Act for shareholder loyalty obligations' and 'activate cumulative voting for the appointment of directors representing minority shareholders.' He specifically stated, 'The Commercial Act amendment will happen within 2 to 3 weeks after the inauguration,' expressing his commitment to 'make more improvements and push hard.'
Regarding the Yellow Envelope Act, he said, 'It is also recognized by the International Labour Organization. It should obviously be done.'
The 'Grain Management Act amendment,' which President Lee pushed as his first policy after becoming the Democratic Party representative, is also expected to be re-promoted. The amendment stipulates that the government must compulsorily purchase rice when prices drop sharply to stabilize rice prices. Although it can guarantee farm income, there are concerns that excessive government finances may be spent to defend against falling rice prices amid declining rice consumption.
◇ 100 trillion investment in AI… Government-led industrial promotion
President Lee stated he would focus on nurturing the 'artificial intelligence' (AI) industry as a long-term strategy for the future of the Korean economy. He plans to expand the budgetary proportion for AI beyond advanced country levels and attract private investments amounting to 100 trillion won in the form of a national fund. He also plans to promote the semiconductor, defense, content, and bio sectors under government leadership.
President Lee set a goal during his campaign to elevate Korea to be among the top three countries in AI globally. He plans to establish AI data centers, create an 'AI highway,' and cultivate national AI innovation hubs. Over 50,000 GPUs (graphics processing units) will be secured, and a national AI data aggregation cluster will be promoted.
Regarding these AI nurturing plans, Cho Seong-bae, a professor in the Computer Science Department at Yonsei University, evaluated that 'there is a plan to create a top three AI country with 100 trillion won, but the detailed strategy seems lacking,' and he indicated that 'if AI does not establish itself as the best in each field, demand for its use will be minimal, so a two-track approach should distinguish sectors requiring strategic selection and concentration from those that require a universal infrastructure.'
In addition to the AI industry, President Lee plans to expand government support for ▲pharmaceuticals and bio ▲cultural content ▲defense industry ▲manufacturing sectors. In the pharmaceutical and bio sectors, the government will expand national investments and reform compensation systems, while also cultivating specialized personnel at the national level. The cultural content sector will be designated as a national strategic industry for concentrated support, with the goal of creating a 'Korean version of Silicon Valley' to form a concentrated content ecosystem and aiming for entry into the global soft power 'Big 5.'
In the defense industry, regular meetings of the defense export promotion strategy meetings chaired by the president will be formalized, and dedicated teams will be organized to secure global competitiveness in the shipbuilding sector, expanding support for exporting corporations. This aims for Korea's entry into the global top four defense powerhouses. A cutting-edge technological innovation ecosystem focusing on semiconductors and secondary batteries will be established, and national advanced industrial complexes will be created to promote regional balanced development.
Experts pointed out that the government must be cautious of excessive intervention in such industrial strategies. Heo Jun-young, a professor of economics at Sogang University, stated, 'Since the government is not specialized in profitability compared to private corporations, there are concerns that the outcomes may fall short of expectations.' He emphasized that technological innovation and industrial development should be driven by corporations rather than the government.
Securing finances for nurturing advanced industries is also a task that the Lee Jae-myung administration must address. Professor Heo remarked, 'In a situation where the tax revenue base is weakening, there is no clear plan for securing finances,' adding, 'Given that this is the most difficult economic climate since the Kim Dae-jung administration, government expenditure must be operated with strict prioritization.'
The establishment of mid-to-long-term policies for designing Korea's future is also raised as a challenge. For example, a blueprint is necessary for structural issues such as ▲youth job problems ▲dual structure of the labor market ▲employment imbalances between regions ▲extension of the retirement age ▲reform of social security schemes outside of pensions.
Lee Bu-hyung, a director at the Hyundai Economic Research Institute, remarked, 'I could not find the mid-to-long-term strategy of the Lee Jae-myung administration, which embodies the direction of national operation during the election process,' stressing that 'there needs to be a vision of how Korea will maintain competitiveness in a situation of worsening low birth rates and an aging population.'