Seoul: Democratic Party presidential candidate Lee Jae-myung stated on Sunday that, if elected, his first action would be to establish an emergency task force focused on economic response. His competitors, People Power Party candidate Kim Moon-soo and Reform Party candidate Lee Jun-seok, have both promised deregulation to rejuvenate the economy. Yet, the rhetoric of crisis has consistently overshadowed the articulation of concrete strategies.
According to Yonhap News Agency, the Korean economy is exhibiting signs of systemic distress. Domestic consumption remains weak, and global uncertainty is rising amid renewed tariff disputes, with annual growth expected to hover near zero percent. As the country grapples with declining birthrates, an aging population, and stagnating industrial innovation, concerns about a prolonged low-growth era are intensifying.
Small businesses and self-employed workers are among the most vulnerable. Korea Credit Data reports that average revenue per small business in the first quarter of this year was 41.79 million won ($30,500), marking a 12.9 percent decline from the previous quarter. Personal debt is mounting, with loans to sole proprietors totaling approximately 719 trillion won as of the end of Q1, reflecting an increase of 15 trillion won year-on-year. During the same period, roughly 499,000 of the 3.62 million businesses with loans shut down.
Signs of economic struggle are becoming more pronounced. Even cafes, which experienced a boom during the pandemic, have decreased in number for the first time, according to National Tax Service data. The number of convenience stores and fried chicken outlets has also diminished. Many who turned to self-employment due to a lack of job opportunities are now retreating amid high inflation, high interest rates, and oversaturated markets.
Despite the economic slump, Seoul's housing market is showing signs of activity again. Ahead of the third phase of the debt service ratio (DSR) cap taking effect in July, apartment prices in the capital, which had previously cooled, are rising once more. With loan conditions set to tighten, last-minute borrowing is driving up transactions. Concurrently, uncertainty surrounding post-election real estate policy is fueling speculative demand.
These indicators are concerning. Rising home prices in Seoul could exacerbate household debt, reduce consumption, and further depress domestic demand, increasing the risk of an economic downturn. Regional disparities in the property market are also widening, with unsold units in the provinces increasing as capital flows to the greater Seoul area.
The incoming administration must act decisively. Fiscal policy should prioritize stimulating domestic demand, and swift intervention in the real estate sector is necessary to prevent broader instability. Voters deserve more than populist pledges; the next administration must present a credible, growth-driven strategy that strengthens the economy's foundations and creates jobs.