President Lee Jae-myung said on the 2nd that South Korea must focus first on restoring growth, describing the current period as a "growth lean season created by the previous administration" as he defended a 820 trillion won ($590 billion) budget plan for next year.
Lee made the remarks on X, formerly Twitter, citing an editorial that argued the budget should add funding to ease polarization given how heavily it leans toward growth sectors. "That does not mean welfare has been rolled back," Lee said. "If we fail to restore sustained growth and slip to zero growth and eventually negative growth, polarization will widen further and welfare could even be scaled back."
"There can be no expansion of welfare that abandons growth, and expanding growth and welfare at the same time is ideal but unrealistic," he said. "Unavoidably, I see now as the time to concentrate on growth and enlarge the pie."
The editorial Lee cited noted that the government's 2027 budget plan is concentrated on growth areas such as artificial intelligence and semiconductors, while increases in distribution areas including welfare and employment are relatively small, and said reinforcement was needed to ease polarization. "It may be hard to be satisfied, but we are also working hard on expanding welfare," Lee said. "There is even criticism that this is an excessive welfare populism budget." He added, "Only a year has passed, so I ask for a little more time."
Ryu Duck-hyun, presidential adviser for fiscal planning, also explained the reasoning behind the large budget in an appearance on CBS Radio the same day. "The growth outlook for this year is good, and beyond next year Korea needs to raise its growth potential," he said. He added that industry and the economy are growing but that K-shaped polarization is unfortunately deepening, and said the government is also placing emphasis on welfare and improving the lives of individual citizens.
Asked about the apparent gap between recent monetary tightening and fiscal expansion, Ryu said the two policies do not necessarily have to move in the same direction. "There are groups and sectors that suffer and face difficulties because of high interest rates or rate increases," he said. "That is the part fiscal policy should handle. Fiscal policy is extremely useful for targeting specific groups."
The remarks were read as meaning that fiscal policy should offset the uneven impact on different income groups that arises during rate increases, since the base rate is a blunt tool that affects the entire economy.
