Kim Yong-beom: "South Korean Economy in Early Phase of Long-Term Structural Shift, Not Just Cyclical Recovery"

Kim Yong-beom, Chief of Staff for Policy at the Presidential Office, argued that the recent signs of a rebound in South Korea's economic growth rate represent "an early phase showing the potential for a shift in the long-term trend itself, rather than a simple economic recovery."

In a post on Facebook, Kim analyzed the situation, stating, "Moments when the growth narrative that defined a country changes and the criteria by which the market views that country's future shift occur perhaps once every 10 or 20 years. Such a change is currently unfolding in East Asia."

Kim’s argument is that the South Korean economy, which was once plagued by theories of "decline," has undergone a transformation starting in 2025.

He attributes this shift to the convergence of several factors: the stabilization of political turmoil following the inauguration of the new administration, the subsequent consolidation of policy directions, and the full-scale onset of a semiconductor super-cycle.

"It is rare in economic history for policy and industrial cycles to amplify each other, but South Korea in the second half of 2025 appears to have entered such a phase," Kim said. "There is sufficient possibility that 2025 will be remembered in the future as the year when the long-term trend line of the South Korean economy began to change direction."

He continued, "A country that was once cited as a representative example of low growth in East Asia has begun to be evaluated as having the strongest growth momentum among developed nations. It is difficult to view this as a mere rebound. The market is redrawing the long-term trend line for the South Korean economy."

He also noted, "Discussions are emerging where growth rates in the high 2 percent range are being mentioned as a realistic outlook, and even the recovery of a 3 percent potential growth rate, which sounded unrealistic for some time, is no longer an entirely unreachable goal."

Kim explained that the capital market reforms being pushed by the government are also connected to this "qualitative change in growth."

He described it as a strategy to circulate the results of productivity gains, driven by three mega-projects, back into the increase of public assets, future industrial investment, and technological innovation.

Regarding this, he remarked, "No matter how strong the engine of production is, the entire economy cannot reach top speed if the transmission that delivers that power does not function properly. What we are trying to change now is that very transmission. Capital market reform is not merely a policy to boost stock prices. It is part of a growth mechanism intended to spread the fruits of production throughout the national economy."

He acknowledged, "Of course, we are still at the beginning," adding, "Low birth rates, an aging population, and household debt remain. The status of the Korean won needs to be further elevated, and reliance on artificial intelligence (AI) and semiconductors is also a task that must be managed."

Nevertheless, he emphasized, "However, the fact that structural problems remain and the fact that the growth path is changing can both be true at the same time. South Korea could go from being the country that most faithfully followed 'Japan's path' to the first country to break away from it."

On the previous day, July 11, Kim also highlighted on Facebook the need for a "speed war" in providing support for the expansion of semiconductor fabs (production plants), stating, "In the competition for production capacity in the AI era, time is the most important resource that only the state can provide."

Kim emphasized, "That time is not created by declaring deregulation or institutional improvements. It is only created when the real-world bottlenecks of power, water, transmission grids, and permits are actually cleared away."

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.