Political paralysis continues to block progress

The U.S. economy grew by 2.8% last year, following a 2.9% expansion the previous year—marking nearly 3% growth in two consecutive years. As the world’s largest economy powers ahead, South Korea lags behind, posting just 1.4% growth in 2023 and barely scraping by with 2.0% last year. For the second year in a row, the U.S.—with a GDP 16 times larger than Korea’s—has outpaced Korea’s growth rate, a reversal not seen since 1971. The fact that a newly industrialized nation like Korea is showing more signs of stagnation than a fully mature economy of the U.S. is deeply troubling.

Strong consumer spending, which accounts for two-thirds of the U.S. economy's GDP, has driven its resilience. Job creation and rising household incomes—boosted by AI-driven innovation and the resurgence of high-tech manufacturing—have kept growth on track. Aggressive investments and breakthroughs from tech giants such as Nvidia, OpenAI, and Microsoft have only added momentum.

Meanwhile, South Korea remains mired in economic stagnation. A prolonged slump in domestic demand, compounded by political instability, has left businesses hesitant to invest and consumers unwilling to spend. The outlook for the next two years is bleak, with sub-2% growth projections already in place. If the second Trump administration materializes and imposes new tariffs, Korea’s economic slowdown could accelerate even further. Some global investment banks have slashed Korea’s growth forecast for this year to as low as 1.2%. The country’s overreliance on exports has made it especially vulnerable to external shocks, exposing it to global economic shifts with little cushion.

Without immediate action to reignite growth, South Korea risks falling into a 0% growth trap. Concerns over "Peak Korea"—the idea that the country’s economic competitiveness has already peaked and is now in decline—are no longer just speculation. Even Korea’s potential growth rate, the highest sustainable rate without triggering inflation, was reportedly surpassed by the U.S. last year. To break free from stagnation, the government must deploy every available policy tool—fiscal, monetary, and financial—while urgently pushing for structural reforms that enhance innovation and strengthen the country’s economic foundation.Yet, political paralysis continues to block progress. As policymakers remain locked in endless debates, precious time is slipping away.