Global Economics Monthly: Political Setback Compounds Korea's Economic Woes

South Korean president Park Geun-hye’s Saenuri Party suffered a surprise defeat in legislative elections held on April 13, failing to secure a majority in the National Assembly. Saenuri’s defeat was largely attributed to dissatisfaction with the state of the economy. Voters have reason to worry.

The slowdown in China and weak growth in other major economies, coupled with demographic decline, high household debt, and low productivity at home, are putting Korea in an increasingly challenging economic bind. As President Park enters the final 18 months of her administration, Korean economic policymakers must reckon with both unique problems at home and stronger international headwinds.