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President Lee calls for 'decisive' reforms to restore 'potential growth rate'

Published: 13 Nov. 2025, 19:33 Updated: 13 Nov. 2025, 19:34

SARAH KIM
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President Lee Jae Myung, right, speaks during a meeting with senior aides on structural reforms at the Yongsan presidential office in central Seoul on Nov. 13. [JOINT PRESS CORPS]

President Lee Jae Myung on Thursday stressed that the most urgent challenge currently facing Korea is "restoring its potential growth rate," calling for bold structural reforms across six key sectors to boost the economy.

"With each change in government, the potential growth rate falls by 1 percent, and we could soon be in the minus," Lee said in a meeting with senior aides at the Yongsan presidential office. "We have a duty to reverse this."

Lee ordered structural reforms in six areas — regulations, finance, public services, pensions, education and labor — as part of efforts to strengthen the country's potential growth rate, referring to the maximum rate at which an economy can grow without causing inflation.

"Our top priority is to restore the potential economic growth rate," Lee said. "To this end, the government should decisively carry out structural reforms."

This comes as the Bank of Korea projected that Korea's potential growth rate could fall below 2 percent for the first time this year and could further decrease to 1.7 percent next year.

"Just like consuming good nutrients will not improve your health if sludge builds up in your blood vessels, no policy will be effective if you neglect the problems of society as a whole," Lee said to his aides.

However, Lee noted that structural reform comes with "pain and resistance," saying change will "not be easy, but we must overcome it."

He stressed that "this is the right time for structural reform as the spark of economic recovery has been ignited."

Lee further vowed that the government will make "thorough and swift preparations so that next year can become the starting point for a major national transformation of Korea through such full-scale structural reform."

Presidential spokesperson Kim Nam-jun said in a press briefing later Thursday that during the closed-door meeting, Lee declared he would designate next year as the "first year of restoring potential growth" as he enters his second year in office in a five-year term.

Regarding regulatory reform, Kim noted that past administrations treated regulatory reform as an end in itself and focused on "short-term outcomes rather than sustainable, rational improvements."

He stressed that the Lee administration plans to develop detailed reform blueprints by sector to achieve "concrete results through regulatory innovation."

The government also plans to apply flexible regulations to new technologies while maintaining appropriate safety oversight for "rational reform that adapts to changing circumstances."

Kim said through financial reform, the government will "promote productive and inclusive finance to support balanced growth and recovery."

He noted, however, that Korea's financial markets are excessively focused on real estate investment amid predatory lending and exclusion of vulnerable groups.

President Lee Jae Myung speaks during a meeting with senior aides on structural reforms at the Yongsan presidential office in central Seoul on Nov. 13. [JOINT PRESS CORPS]

Lee was said to have criticized the current system as a "financial class hierarchy," where low-income people are forced to pay high interest rates, and instructed officials to find solutions outside the box, Kim said. The president further emphasized that financial institutions must fulfill their public responsibilities.

Public sector reform will, in turn, focus on restoring public institutions as engines of economic growth, Kim added, noting that the previous administration's excessive work force cuts and profit-centered evaluations limited their functions.

Lee stressed that public sector reform doesn't mean cutting powerless workers but rather "eliminating unnecessary executive positions," Kim added.

The president also acknowledged that pension reform is a long-term task that requires caution and detailed preparation.

He said that education reform needs to strengthen regional universities, including flagship national universities, and address major challenges such as provincial population decline, climate change and the AI-driven transformation of society.

Regarding labor reform, Less stressed that the government will strive to guarantee the right to work for all people, including youths and older adults, and to reduce polarization in the labor market.

Lee further stressed that the government aims for "true growth that respects labor" through communication and cooperation between labor and management, as well as public consensus.

BY SARAH KIM [[email protected]]