South Korea – Park Showing Resilience
Approaching the end of the third year of what can fairly be described as a very tumultuous presidency, Park Geun-hye has displayed remarkable resilience, as indicated by the rise of her approval rating above 40% in the most recent polls, compared to a low of 33% recorded back in February 2015. However, Park continues to court controversy, with proposed labor-market reforms and a battle over the content of the history curriculum in Korean schools most recently roiling the political waters, and gives no indication that she intends to play it safe in the run-up to legislative elections due to take place in April 2016.
Although the latest controversies seem unrelated, both have been held up as evidence that Park is reneging on the promise of “economic democratization” that was a central theme of her 2012 election campaign. Both the president’s alleged attempt to whitewash the brutality of the military dictatorship headed by her father, Park Chung-hee, in the 1960s and 1970s, and the heavy-handed response to union protests against reforms aimed at addressing labor-market rigidities (which included the use of water cannons against protesters and the president’s comparison of militant union members to Islamist terrorists), have fed into an opposition narrative of creeping authoritarianism.
Given the fact that Park is not eligible to stand for re-election in December 2017, it is debatable whether such charges will resonate among the broader electorate to an extent that hurts the governing NFP’s chances of retaining its majority status in the 300-member National Assembly at the upcoming elections. The NFP is currently polling at close to 39%, compared to just 22% for the main opposition NPAD, and opinion on the textbook controversy is evenly split.
With two years remaining in Park’s term, a victory for the NFP in April would ensure policy continuity in the near term. Increased public spending is projected to produce the largest central government deficit in seven-years, but at just 2.3% of GDP, the shortfall is not cause for concern. In keeping with the pro-growth fiscal strategy of Finance Minister Choi Kyung-hwan, the Park administration will rely on spending increases, including a supplementary budget, if necessary, to sustain strong employment growth. A combination of weaker regional demand and the negative impact of the MERS health scare earlier this year will hold real GDP growth to less than 3% in 2015, but that still compares favorably with regional competitors.Back to Blog