"Growth over factionalism, national interest over ideology, the stock market over real estate, regions over Seoul."
The keyword that defines the first year of the Lee Jae-myung administration is "great transition." The government has prioritized growth and pragmatism over the factional logic of conservatives and progressives, and recalibrated relations with the United States, China, and Japan based on national interest rather than ideology in diplomacy. In economic policy, it has focused on shifting Korea's real estate-centered asset market toward an equity-centered structure, while in national governance, it has sought to move the center of gravity from Seoul to the regions.
KOSPI 8,000, a $350 billion investment package for the United States, and a won-dollar exchange rate in the 1,500 won range — these numbers compactly capture the first year of the Lee administration. The KOSPI, which stood at 2,770.84 on June 4 last year when President Lee Jae-myung was inaugurated, closed at 8,788.38 on the 1st, one year later, setting another all-time high. This signals that a structural shift in Korea's asset market — long dubbed the "Republic of Real Estate" — toward equities is now in full swing.
The $350 billion investment package for the United States is also cited as a representative achievement. Amid high-tariff pressure from the Donald Trump administration, the government presented a large-scale investment card and succeeded in lowering the reciprocal tariff rate from 25% to 15%. On the other hand, the won-dollar exchange rate has faced a high-rate phase hovering around 1,500 won, as foreign investors' profit-taking sales triggered by the KOSPI surge overlapped with instability in the Middle East.
The era of KOSPI 8,000 carries a meaning beyond a mere stock market rally. The direction of the Lee administration's economic policy over the past year can be summarized as "growth over factionalism, national interest over ideology, equities over real estate." Aiming to vault Korea into one of the world's top three artificial intelligence (AI) powers, the government has secured 260,000 advanced graphics processing units (GPUs) and created a 150 trillion won National Growth Fund to concentrate national capabilities on fostering advanced industries such as semiconductors, AI, biotechnology, and defense. The research and development (R&D) budget has also been expanded to 35.5 trillion won, the largest ever.
Shin Jung-seop, a professor of political science and diplomacy at Soongsil University, said, "It was a year that quickly stabilized the anxiety and uncertainty that had spread across politics, the economy, and society in the wake of the martial law and impeachment incidents, laying the foundation for growth."
The problem is that the fruits of growth are not spreading to all classes. According to the National Data Agency's household trend survey, the gap in surplus between the top and bottom 20% of households in the first quarter of this year widened to 3.884 million won, the largest since 2022. The high exchange rate, with the 1,500 won level becoming the new normal, is also cited as a factor eroding the real purchasing power of vulnerable groups through inflationary pressure, widening the gap between the asset market boom and consumer sentiment.
Growth Driven by Semiconductors, Defense
But Income Gap Between Top and Bottom Widens
"Golden Time for Structural Reform of Labor, Pensions"
The youth employment problem is cited as an even more serious challenge. While the government plans to create new opportunities through the National Growth Fund and the "Startup for All Project," structural changes are emerging in which growth no longer leads to job creation due to the spread of AI and automation.
Lee Byoung-hoon, professor emeritus of sociology at Chung-Ang University, pointed out, "The most urgent task right now is the youth employment problem," adding, "An increase in young people who give up entering the labor market altogether not only undermines growth potential but also raises the costs society as a whole must bear."
Ultimately, the success or failure of the Lee administration, now entering its second year in power, hinges less on the speed of growth than on whether it can build a sustainable growth structure, analysts say. This is why structural reform tasks such as pension, labor, and education reform are being raised.
Professor Lee said, "The spread of AI is signaling a future labor market in which people cannot work even when they want to," and proposed, "It is necessary to operate a future-discourse public deliberation body in which various sectors of society participate, going beyond a political circle trapped in extreme confrontation."
The roughly two years following the June 3 local elections and leading up to the 23rd general election in 2028 are evaluated as the "golden time" that will determine the success or failure of the Lee administration's structural reforms. Professor Shin said, "The next two years are the time to push forward reform tasks that carry heavy political burdens," adding, "If President Lee does not cling to approval ratings, he can take bold gambles."
Kang Woo-chang, a professor of political science and diplomacy at Korea University, also stressed, "The two years could in effect be the last chance," and added, "If the past year was a time to restart the engine of growth, the next two years must be a time to change the national fabric through grand social compromise."
Nuclear Submarines with US, 70 Trillion Won Currency Swap with China... North Korea Remains a Tough Challenge Despite Conciliatory Gestures
When the Lee Jae-myung administration was launched, some reactions to its foreign-policy and security slogan of "pragmatic diplomacy centered on national interest" were lukewarm. The concern was that it was a value that should naturally be pursued, but lacked a concrete philosophy or strategy. One year later, the government is being credited with significant achievements in restoring relations with major powers and expanding diplomatic space.
With its ally the United States, major outcomes emerged from the first summit held in Gyeongju, North Gyeongsang Province in October last year. Jung Ku-yeun, a professor of political science at Kangwon National University, evaluated, "Consultations with the U.S. side went well on issues that our government has long pursued, such as nuclear-powered submarines and nuclear cooperation." However, she pointed out, "Security issues such as nuclear submarines and wartime operational control require all-around diplomacy with the U.S. and should not be rushed."
Korea-China relations are in a recovery phase. Chinese President Xi Jinping made a state visit to Korea in October last year for the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju and a Korea-China summit, the first such visit in 11 years. President Lee Jae-myung also visited China as a state guest in January, the first South Korean president to do so in nine years. The two sides also announced 20 memoranda of understanding (MOUs) and a currency swap agreement worth 70 trillion won.
50 Countries, 90 Summits in One Year
Strengthened US Cooperation in Nuclear Power, Shipbuilding
Diplomatic Diversification Alongside China Reset
Experts point out that beyond restoring Korea-China relations, the relationship must advance to an institutionalized stage. Kang Jun-young, a professor at the Graduate School of International and Area Studies at Hankuk University of Foreign Studies, said, "It is positive that the strained Korea-China relationship has been normalized," but added, "Now that one year has passed since the government's launch, it is necessary to shift from event-driven diplomacy to roadmap-driven diplomacy." He stressed, "Along with regularizing summits, ministerial, vice-ministerial, and working-level consultative bodies should be operated systematically, and priority tasks and follow-up schedules in each field should be specified."
Amid deepening instability in the international order, the Lee administration is also putting effort into diplomatic diversification. Since taking office, President Lee has held more than 90 summit meetings with leaders of more than 50 countries over the past year. He has declared substantive cooperation with the Association of Southeast Asian Nations (ASEAN) and European Union (EU) countries.
In contrast, inter-Korean relations remain the toughest challenge. South-North relations, which had been frozen since the breakdown of the U.S.-North Korea summit in 2018, deteriorated further under the previous government and led to North Korea's "hostile two-state" stance. The current administration has issued conciliatory messages, including hinting at the possibility of adjusting the Korea-U.S. joint military exercises, but has yet to draw a response from Pyongyang.
The Four Aides Who Drove Achievements... Attention on Their Roles in Year Two
Behind the achievements of President Lee Jae-myung's first year in office lies the role of key aides and the cabinet that supported the broader operation of state affairs, observers say. Despite external variables such as the Korea-U.S. tariff negotiations and the Middle East war, they managed economic and diplomatic issues stably and maintained the momentum of state affairs. As the second year of the administration begins, political circles are paying attention to what positions and roles they will take on.
Kang Hoon-sik, chief of staff to the president, stands out as the closest aide to President Lee. In addition to assisting the president at close range, Chief of Staff Kang produced tangible results, including securing 273 million barrels of crude oil during a visit to four Central Asian and Middle Eastern countries in April this year as the president's special envoy for strategic economic cooperation. Given his ability to span both policy and political affairs, prospects are strong that he will continue to play a key role for the remainder of the term.
Kang Hoon-sik, Active Across Policy and Politics
Kim Yong-beom, Overseeing State Tasks and Reform
Kim Min-seok, Possible Bid in August Party Convention
Kim Jung-kwan, Set to Lead Government Growth Strategy
Kim Yong-beom, the chief of policy, has taken on the role of the policy control tower overseeing state tasks
