Risk of 'Impeachment Bill Rejection' Expands...Joint Statement from Relevant Ministries to Be Announced Soon (Comprehensive)

Budget and Economic Policy in the Fog of a Standstill

On the 5th, at the Government Seoul Office in Jongno-gu, Seoul, Choi Sang-mok, Deputy Prime Minister for Economy and Minister of Strategy and Finance, is reviewing documents during the first Economic Ministers' Meeting held after the cabinet members submitted their resignations. Photo by Jo Yong-jun

Concerns are growing that the emergency martial law situation triggered by President Yoon Suk-yeol and the ensuing impeachment standoff will prolong, amplifying the shockwaves to the South Korean economy. As the impeachment motion against President Yoon failed, uncertainty has further increased. Ministers from key economic departments, including the Ministry of Economy and Finance, are holding consecutive meetings such as the Economic Relations Ministers' Meeting and the Macroeconomic and Financial Issues Meeting to take urgent action.

On the 8th, Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, commented on the previous day's impeachment motion dismissal, stating, "The economic team will do its utmost to maintain external credibility and ensure the smooth implementation of economic policies regardless of the political situation." The Ministry of Economy and Finance and other economic departments held an emergency Economic Relations Ministers' Meeting that afternoon and planned to issue a joint statement by the ministers of related departments. Following this, an emergency Macroeconomic and Financial Issues Meeting was convened with the attendance of Lee Chang-yong, Governor of the Bank of Korea, Kim Byung-hwan, Chairman of the Financial Services Commission, and Lee Bok-hyun, Governor of the Financial Supervisory Service.

The impeachment motion against President Yoon Suk-yeol, submitted to the National Assembly plenary session the previous day, failed as most members of the People Power Party boycotted the vote. With the failure of the impeachment motion, the uncertainty surrounding the president's position has extended, and the prolonged leadership vacuum is expected to have an even greater impact on the South Korean economy.

With the impeachment vote stalled, the processing of next year's budget and the advancement of key economic policies have been plunged into a fog of zero visibility. Earlier, the National Assembly set a deadline to pass the budget by the 10th, but due to political upheaval, it is difficult to guarantee approval within the year.

There are also concerns that the golden time to respond to an already difficult economic situation, including declining export growth rates and shrinking domestic demand, will be missed. With the inauguration of the second Trump administration in the U.S. scheduled for next month, comprehensive government support is needed for export companies.

As the second Trump administration, emphasizing strong protectionism, has announced trade policies centered on high tariffs, the South Korean economy, which is highly dependent on exports, must devote all its capabilities over the next four years to reshaping trade relations with the United States.

The Ministry of Economy and Finance has postponed the announcement of the 'Next Year's Economic Policy Direction,' usually released in mid to late December, to January of next year amid the impeachment crisis. Given the martial law situation and the inevitable indefinite delay in passing the budget beyond the legal deadline, it is difficult to present the economic policy direction for the new year without the budget and tax reform bill being approved.

Since the 5th, the government has activated the ‘Economic and Financial Situation Monitoring Task Force,’ involving not only the financial and foreign exchange markets but also departments and agencies related to the real economy. To minimize the impact on external credibility, stabilization measures are being continued targeting international financial organizations, international credit rating agencies, allied countries' economic lines, overseas investors, domestic economic organizations, and financial market stakeholders.

This content was produced with the assistance of AI translation services.