Ministry of Finance and Economy

On May 20, First Vice Minister of Finance and Economy Lee Hyoung Il attended the Cabinet Meeting held at the Blue House, where he presented the key economic achievements of the first year of the People’s Sovereignty Government.   Since its launch, the People’s Sovereignty Government has faced the unprecedented challenge of restoring the Korean economy to a normal trajectory following the economic disruption caused by martial law. More recently, it has also had to navigate a complex global crisis driven by rapid changes in external economic conditions, including the Middle East conflict.   In response, the administration has focused on pursuing pragmatic policies aimed at delivering tangible benefits to businesses and the public, including special measures to stabilize consumer prices, an AI-driven industrial transformation, and efforts to revitalize the domestic capital market. These efforts have already produced visible outcomes within a short period of time, including a rebound in economic growth (3.6% in the first quarter of 2026) and the KOSPI surpassing the 7,000 mark. Specific achievements are as follows.     1. Economic Recovery and Accelerating Growth Momentum   1)      Following the rebound from the martial law shock (from 0.3% in the first half of 2025 to 1.7% in the second half of 2025, year-on-year), growth momentum strengthened further, with the economy recording growth of 3.6% in the first quarter of 2026. On a quarter-on-quarter basis, the economy grew by 1.7%, ranking first among major OECD economies reporting growth data to date.   2)      The recovery in economic growth contributed to improved corporate performance and domestic demand, creating a virtuous cycle in which stronger tax revenue further expanded the government’s revenue base. * Year-on-year change in national tax revenue (KRW trillion): -51.8 (2023) → -7.6 (2024) → +37.4 (2025)  →  +41.5 (projected for 2026)   3)      The government also achieved meaningful progress in regional job creation, becoming the only administration to record simultaneous increases in employment both nationwide and outside the Seoul metropolitan area. * Increase in employment nationwide (10,000 persons, y-o-y): 13.9 (during the 10 months prior to the administration’s inauguration) → 18.6 (during the 10 months following the inauguration) Increase in employment outside the Seoul metropolitan area (10,000 persons, y-o-y): 3.6 → 16.6 over the same period 4)      Reflecting the acceleration in growth momentum, major domestic institutions and global investment banks have been revising upward their growth forecasts for the Korean economy this year. * Korea Development Institute (KDI): 1.9% → 2.5%; Average forecast of eight global investment banks: 2.1% → 2.6%   2. Enhancing Korea’s Global Economic Standing   1)      Korea’s ranking in global exports rose from eighth place (January – March 2025) to fifth place (January – March 2026). The current account balance also recorded an all-time high of USD 73.8 billion in the first quarter of 2026, amounting to nearly 60% of the country’s full-year current account surplus of USD 123.1 billion in 2025.   2)      With the KOSPI surpassing the 7,000 mark, the market capitalization of the Korean stock market rose significantly from thirteenth to eighth in the world (as of June 2, 2025).   3)      Following Korea’s inclusion in the World Government Bond Index (WGBI) on April 1, 2026, net purchases of Korean government bonds by foreign investors have increased*, contributing to greater stability in the government bond and foreign exchange market. * Net purchases of Korean government bonds by foreign investors (KRW trillion, settlement basis): Monthly average of 4.3 (2023) →  8.8 (Apr. 2026)   4)      Reflecting these strong economic fundamentals, major global credit rating agencies have maintained Korea’s sovereign credit ratings with a “stable” outlook*, providing further evidence of positive international assessments of the Korean economy. * Fitch (Jan. 30): AA-, Stable; Moody’s (Feb. 13): Aa2, Stable; S&P (Apr. 29): AA, Stable   3. Stable Management of Consumer Prices   1)      For the first time in 29 years, the government introduced a maximum price system for petroleum products while simultaneously implementing fuel tax cuts. As a result, consumer inflation was reduced by 0.6%p in March and 1.2%p in April compared with a scenario without the maximum price system and fuel tax reductions.   2)      Through the Ministerial Task Force on Consumer Price Management, chaired by the Deputy Prime Minister, the government closely monitored key livelihood-related items*, while efforts to establish market order contributed to broader declines in food prices**. * Measure to stabilize prices were introduced for school uniforms (Feb. 26), apartment maintenance fees (Mar. 26), and private education and telecommunications fees (Apr. 9), etc.              ** Change in consumer prices of processed food products (Apr. 2026 compared to May. 2025, %): Cooking oil -6.7; flour -4.6; sugar -4.4   3)      Supported by these policy measures, Korea’s consumer inflation has remained in the low 2% range despite the spillover effects of the Middle East conflict, staying below the levels recorded in many major economies. * Consumer inflation rates in major economies (%): Australia (Mar.) 4.6; OECD average (Mar.) 4.0; United States (Apr.) 3.8; United Kingdom (Mar.) 3.4; Germany (Apr.) 2.9; Korea (Apr.) 2.6   The people’s Sovereignty Government will continue to pursue a major economic transformation guided by the principles of “pragmatism and tangible results” in order to restore potential growth and ensure that the benefits of growth are broadly shared with the public. Please refer to the attached files.

The Ministry of Economy and Finance (Minister: Koo Yun Cheol) held an official inauguration ceremony on January 2 at the Government Complex-Sejong, marking a strong first step toward a new leap forward for the Korean economy.   Under the government reorganization, the Ministry of Economy and Finance (MOEF) will be responsible for the formulation and coordination of economic policies; the management of currency, foreign exchange, the national treasury, government accounting, taxation, international finance, and oversight of public institutions; and the administration of matters related to economic cooperation and state-owned properties. The Ministry of Planning and Budget, spun off from the former Ministry of Economy and Finance, will assume responsibility for the formulation of mid- to long-term national strategies and fiscal policies; the preparation, execution, and performance management of budgets and funds; and matters related to private investment and national debt.   The event was organized to mark the launch of the new organization and to reaffirm the government’s commitment to making 2026 the inaugural year of a major leap forward for the Korean economy.   In his inaugural address, Deputy Prime Minister Koo stated, “We face a challenging but imperative goal: achieving a rebound in potential growth and making this year the inaugural year of a major leap forward for the Korean economy,” adding that “while last year was a time focused on recovery, 2026 must become a pivotal year in driving full-fledged growth.”   He also underscored the need for MOEF to be recognized above all for its policy achievements, encouraging staff by saying, “Let us all work together, with a renewed sense of purpose in the new year, to open a new chapter for the future of MOEF.”   The event also featured a presentation on the mission and policy directions of MOEF. Amid a period of structural transition, these efforts aim to lead a major leap forward for the Korean economy by ensuring stable management of the macroeconomy and people’s livelihoods; rationally adjusting economic policies; operating an efficient and equitable tax system; strengthening strategic finance and external cooperation; proactively managing the national treasury; and promoting innovation in public institutions. Please refer to the attached files.

Acting President, Deputy Prime Minister, and Minister of Economy and Finance issued emergency directives to all government ministries and public officials following the National Assembly’s passage of the impeachment motion against the Prime Minister on December 27.   Acting President emphasized that “Although the National Assembly has passed the impeachment motion against the Prime Minister, the government must do its utmost to ensure that the public does not feel uneasy and that the safety of the nation and the daily lives of the people remain unaffected”.   As for national security, he directed the Acting Minister of National Defense to “shore up the military’s readiness posture so that there are no gaps in national security and public safety and to be fully prepared to respond immediately to any crisis situations”.   He also instructed the Chairman of the Joint Chiefs of Staff to “enhance vigilance, as North Korea may perceive the domestic situation as a security vulnerability and attempt various forms of provocations; strengthen military vigilance to prevent any misjudgment by North Korea that could lead to reckless provocations; and uphold a robust security posture grounded in the U.S.-ROK alliance”.   With regard to diplomacy, he instructed the Minister of Foreign Affairs to “sustain close communication channels with major nations, including Japan and China, based on the solid U.S.-ROK alliance; and through overseas missions, actively convey that the Korean government’s foreign policy stance remains unchanged with no disruptions to international exchanges or trade”.   Concerning public security and social order, the Acting Minister of the Interior and Safety was instructed to “establish robust law and order so that citizens can feel secure in their daily lives, especially as there is a risk of increased crimes exploiting the current state of uncertainty; and maintain a thorough disaster response system in cooperation with all local governments, given the potential for various disasters and accidents; and request cooperation from all levels of local government leaders to ensure that local government officials remain dedicated to their duties without any disruptions”.   With respect to healthcare and welfare, he instructed the Minister of Health and Welfare to “focus resources on sustaining emergency medical systems, such as the winter emergency medical response plan and emergency care measures during the Lunar New Year holiday and ensure that services reach vulnerable populations effectively, leaving no one behind in welfare support.” Please refer to the attached files.