Table of Contents
- Would the Korean economy be positive if Lee Jae-myung is elected president?
- Concerns about lack of policy consistency and diminishing market confidence
- Deteriorating fiscal health may shake the economic foundation
- Possibility of large corporations being weakened and loss of global competitiveness
- Real estate market may fall into the swamp of 'uncertainty' again
- Stock market may face correction after a short rise
- ‘Pragmatism’ alone may not resolve uncertainties
Would the Korean economy be positive if Lee Jae-myung is elected president?
As the impeachment of President Yoon Seok-yeol becomes a reality, the possibility of an early election is increasing. In this context, Lee Jae-myung, the candidate from the Democratic Party, is rising as a strong contender for the next presidency.
He is attempting to secure the centrist vote by advocating 'pragmatism beyond ideology and factions', but there are various concerns regarding his economic management capabilities and policy consistency.
This article will focus on the negative scenarios that Korea's economy may encounter if Lee Jae-myung is elected as president.
Concerns about lack of policy consistency and diminishing market confidence
Candidate Lee Jae-myung has historically emphasized welfare and distribution, but recently he has abruptly shifted his policies towards a focus on corporate-centered growth. Such changes could undermine policy consistency and create confusion in the market.
In particular, the conflict between growth and distribution may create difficulties for companies in making investment decisions and send negative signals to foreign investors. Reports have raised concerns that "frequent changes in policy direction may keep foreign investors cautious."
This unstable policy framework could have negative repercussions on the economy as a whole, meaning efforts to restore trust are necessary.
Deteriorating fiscal health may shake the economic foundation
Candidate Lee Jae-myung announced plans to create a national wealth fund of 50 trillion won to cultivate a Korean version of NVIDIA and significantly increase public R&D and welfare spending. While these policies may stimulate the economy in the short term, they could raise concerns about the long-term sustainability of national finances.
Reports indicate that government-led investments could suppress private investments, leading to inefficiencies in resource allocation. Such issues are likely to act as negative factors that could impact the economy overall.
Possibility of large corporations being weakened and loss of global competitiveness
Candidate Lee Jae-myung emphasized that "the success of corporations leads to national development"; however, considering his relationship with labor and existing progressive political tendencies, the possibility of intensified regulations on large corporations remains. In particular, a passive attitude towards labor flexibility could lead to decreased productivity and weakened global competitiveness.
He has shown a commitment to promoting growth in advanced industries like semiconductors and AI. However, government-led industrial policies may inhibit the autonomy and efficiency of private enterprises. This could be interpreted negatively by global investors who prefer market-friendly policies.
Real estate market may fall into the swamp of 'uncertainty' again
Candidate Lee Jae-myung stated that he would "prefer not to intervene" in real estate policies. However, integrating past comments on increasing taxes on multiple homeowners and expanding public-led supply, there is potential for increased market intervention in the medium to long term.
Confusion in the real estate market may lead to price instability and a decrease in transaction volume. Consequently, the gap between popular and unpopular areas may become even more pronounced. Particularly, the "one high-quality home" phenomenon could accelerate asset concentration and make it harder for actual demanders to secure their homes.
Stock market may face correction after a short rise
Policies aimed at revitalizing the stock market, such as the abolition of the financial investment income tax and reduction of the dividend income tax, may yield superficial positive effects. In the short term, there is possibility for an increase in stock prices due to increased liquidity.
However, uncertainties in policies regarding the Commercial Law and labor-related policies may lead investors to adopt neutral or wait-and-see attitudes. In such a situation, a cautious approach is warranted.
Recently, as President Trump’s strong tariff policies are being implemented, the stock market has shown a declining trend. As a result, countries relying on exports, including Korea, are facing renewed trade risks.
Particularly, the Korean economy might respond sensitively to the restructuring of supply chains centered around the U.S. in semiconductors, automobiles, and batteries. This situation may lead foreign investors to be more cautious in accessing the Korean market. Such changes are expected to have a significant impact on the future of the Korean economy.
In conclusion, candidate Lee Jae-myung's policies may promote index rises based on liquidity in the short term. However, the lack of policy consistency and worsening global trade conditions could impose negative pressure on the Korean stock market. Particularly, if Trump's protectionist policies continue, it could realistically lead to the KOSPI falling below 2400. It is necessary to consider these variables.
‘Pragmatism’ alone may not resolve uncertainties
Candidate Lee Jae-myung emphasizes a practical approach, but unless he completely renounces the historically strong distribution-centered policies and labor-centered agenda, it seems difficult to resolve the overall economic uncertainties.
In particular, securing policy consistency and market confidence hinges not only on the president's words and actions but also on the philosophy and capability of national governance. However, currently, candidate Lee Jae-myung has not received sufficient validation in this area.
His election may have positive aspects in the short term by alleviating political tensions, but in the medium to long term, it also contains risks of policy confusion and increasing economic uncertainty. This situation suggests that he may face various challenges in the future.
#LeeJaeMyung, #LeeJaeMyungEconomicPolicy, #PolicyUncertainty, #KoreanEconomicOutlook, #LeeJaeMyungPresident, #RealEstatePolicy, #StockMarket, #CorporateRegulation, #FiscalHealth, #NationalDebt, #PolicyConsistency, #ForeignInvestment, #LaborMarket, #GrowthPotential, #PrivateInvestment, #SmallAndMediumEnterprises, #Startups, #PoliticalChaos, #EarlyElections, #ImpeachmentPolitics, #Pragmatism, #LargeEnterprisePolicy, #ChaebolRegulation, #TaxPolicy, #FinancialMarket, #AdvancedIndustry, #AIPolicy, #SemiconductorPromotion, #HousingImbalance, #EconomicInstability
