Seven months into his presidency, South Korean President Lee Jae-myung is set to refocus on delivering tangible results in diplomacy and the economy ahead of local elections. While the political situation has stabilized, challenges remain with a sluggish economy and dim prospects for North Korean dialogue.
President Lee Jae-myung took office in early June, pledging to heal the national divisions caused by his predecessor Yoon Suk-yeol's failed martial law attempt. Seven months later, the political situation has stabilized, though the economy struggles with rising prices and a weakening Korean won. Prospects for dialogue with North Korea remain low amid Pyongyang's unresponsiveness.
As the new year approaches, Lee plans to prioritize tangible outcomes in diplomacy and the economy while advancing key reforms. Revitalizing the economy tops the agenda, with the prolonged slump in the won and weak consumption clouding growth prospects. The June 3 local elections, including the high-stakes Seoul mayoral race, are viewed as an early test of Lee's leadership after his first full year.
On foreign policy, the administration will detail security and trade pacts from Lee's summit with U.S. President Donald Trump at the late October APEC meeting in Gyeongju. Negotiations with Washington will cover key issues like building nuclear-powered submarines and gaining rights to enrich uranium and reprocess spent nuclear fuel. Coordination is also needed to implement Seoul's $350 billion investment pledge, including $150 billion for shipbuilding cooperation.
Lee aims to deepen ties with China following a positive tone set at his first summit with President Xi Jinping on the sidelines of the early November APEC. A second Lee-Xi meeting is anticipated early next year, focusing on practical cooperation with South Korea's top trading partner and ways to revive North Korean talks.
Relations with Japan require careful handling amid tensions between Tokyo and Beijing over Prime Minister Sanae Takaichi's remarks on Taiwan. Consultations are underway for Lee's visit to Japan next month to meet Takaichi and build on recent bilateral momentum through leader exchanges.
After focusing on major powers this year, Lee will intensify efforts to improve North Korean ties. Pyongyang has ignored his peace overtures while aligning closer with Moscow, including sending troops to support Russia's war in Ukraine. In a policy briefing last week, Lee committed to preemptive tension-reduction measures, citing North Korea's triple-layered barbed wire and barriers along the Military Demarcation Line, plus severed bridges and roads to the South.
Economically, boosting the stock market and stabilizing real estate are central challenges. Lee's expansionary fiscal policy has lifted domestic demand, but the weak won raises fears of added inflation and market instability. He has stressed continued fiscal expansion and structural reforms to nurture high-tech industries like artificial intelligence.
Domestic politics stay divided a year after Yoon's surprise martial law declaration. Trials continue for the former president, Cabinet members, and military commanders involved. This week, the National Assembly passed a Democratic Party-led bill to create a special tribunal for martial law-related cases. The opposition People Power Party slammed it as an effort to stack the bench and erode judicial independence, calling on Lee to veto the "unconstitutional" measure.
