The Korea Development Institute (KDI), a state-run research body, diagnosed in its April economic report that Korea's economy "had shown a moderate recovery trend but downside risks are expanding due to the U.S.-Iran war." This is the first time KDI has used the expression "downside risks" since April last year, when U.S. President Donald Trump imposed reciprocal tariffs. KDI noted that "petroleum prices have surged sharply, raising the possibility of broader price increases in sectors closely tied to crude oil, while investment recovery may also be constrained."
Now is the time to mobilize all national capabilities to respond to the sweeping economic and diplomatic-security repercussions of the Iran war. An extreme crisis is unfolding before our eyes, with international oil prices, consumer prices, and exchange rates all surging simultaneously, amplifying fears of stagflation. South Korea's economy, with its heavy dependence on Middle Eastern energy, has particular reason to be alarmed. In that regard, it is belated but welcome that President Lee Jae-myung met face-to-face with Democratic Party of Korea leader Jeong Cheong-rae and People Power Party leader Jang Dong-hyuk for the first time in 211 days at the "Ruling-Opposition-Government Livelihood Economy Council" on the 7th. President Lee urged bipartisan cooperation to overcome the crisis, saying, "Internal unity is truly important in such difficult times."
This meeting should serve as an occasion for the ruling party, the opposition, and the government to unite and overcome the economic and security crisis triggered by the Middle East war. The immediate priority must be ensuring the safety of 26 Korean vessels and approximately 170 crew members trapped in the Strait of Hormuz. Finding alternative crude oil supply sources to replace disrupted supplies is especially urgent — a matter of every moment counting. The government secured a commitment from the United Arab Emirates last month for priority supply of 24 million barrels of crude oil, but this falls far short of resolving energy supply concerns. As the government has decided to dispatch special envoys accompanied by major energy companies to Saudi Arabia, Oman, and other nations to secure alternative crude volumes, the private sector and government must work as one team and wage an all-out effort to diversify supply sources.
With the prolonged Iran war inflicting severe pain on businesses and livelihoods, the role of politics is bipartisan cooperation for crisis management. If the ruling and opposition parties cling to political infighting and power struggles over the national interest, the country's crisis response capacity will be significantly diminished. Now is the time for both parties to set aside unproductive political disputes and channel all their energy into swift, effective support and economic recovery — solely focused on overcoming this crisis.