'At a crossroads between entrenched low growth and a rebound'

Lee stresses productive, virtuous-cycle fiscal strategy

President Lee Jae Myung reviews documents during a Cabinet meeting at Cheong Wa Dae on Tuesday. [Yonhap]
President Lee Jae Myung reviews documents during a Cabinet meeting at Cheong Wa Dae on Tuesday. [Yonhap]

President Lee Jae Myung said Tuesday that next year's government budget must serve as a stepping stone to propel South Korea into a position of decisive technological leadership and as a catalyst for restoring livelihoods, amid rapid shifts in the global industrial order driven by the AI revolution and the energy transition.

Speaking at the opening of a Cabinet meeting at Cheong Wa Dae, Lee said the world is at a critical inflection point in its industrial order. "The AI revolution, the energy transition and the reshuffling of global supply chains are converging to fundamentally alter the structure of the world economy and industry," he said.

"Amid this upheaval in the international order, next year's budget must be a firm stepping stone that propels South Korea into a position of unrivaled leadership," Lee said. "At the same time, it must serve as a catalyst that brings visible change to every aspect of people's lives."

Lee outlined securing future growth engines and stabilizing livelihoods as the two central priorities of the budget proposal. "To that end, the government has finalized the budget with a focus on key goals: creating future growth drivers, building a ladder of hope for young people, meaningfully easing polarization and strengthening the social safety net," he said.

On specific initiatives, Lee said the budget would deliver tangible results for the public, including rapid progress on three mega-projects and seven seed policies, support of up to 200 million won ($146,000) per young person, the development of 10 startup cities, the supply of 200,000 units of public housing and an expansion of basic income for rural communities.

"We now stand at a crossroads — between entrenched low growth and a rebound in our potential growth rate," Lee said. He called for a productive, virtuous-cycle fiscal strategy that uses expanded future resources to grow the economic pie, upgrades industrial capacity and in turn broadens fiscal room.

Lee also called for a tailored fiscal response to the changing financial environment. "A rise in interest rates is unavoidable at this point," he said. "Fiscal policy must play a precise, well-calibrated role to minimize the hardship that rising rates inflict on vulnerable groups and to ensure their potential is not undermined."

With the regular National Assembly session opening in September, Lee urged bipartisan cooperation on the budget. "Politics must also pool its wisdom and strength for a new leap forward in the national economy," he said. He added that if the Assembly broadly incorporates public opinion and makes necessary improvements during the budget review process, the government would actively respect those changes.


sunpine@heraldcorp.com