South Korea takes its place on the frontlines of financial chaos
The Korean government and the central bank will have their work cut out for them in 2023. They must overcome a loss of trust and criticisms over raising rates too quickly if they want to keep the economy humming and avoid a new crisis.
South Korea’s president, Yoon Suk-yeol, and its central bank governor, Rhee Chang-yong – the two most important figures in charge of reviving South Korea’s economy – started work within three weeks of each other in early 2022. They have their work cut out.
For while South Korea is often in the vanguard of striking pivots in global markets, political gridlock is thwarting its efforts to create a more dynamic and inclusive economy.
Rhee took over at the central bank in April 2022, following eight years at the IMF. The Bank of Korea was the first important monetary authority to raise interest rates – in August 2021 – as pandemic-related threats to the economy receded, but it now faces criticism for hitting the brakes too aggressively.
However, it is Yoon who is really in the spotlight. The 62-year-old president, who took office on May 10, 2022, was elected on an ambitious platform of restoring 'fairness and common sense' via 'private-sector-led' growth to Asia’s fourth-biggest economy.
He promised to add more jobs at a time of near-record home prices and a widening wealth gap. The president’s team made a particularly strong argument for ending the so-called 'Korea discount' that has long plagued the nation’s stock market.