[Editorial] Six Months into the Lee Administration: The 'Gray Rhino' Crisis Must Be Confronted

On the 7th, Kang Hoon-sik, Chief Presidential Secretary, stated, "Following President Lee Jae-myung’s pragmatic philosophy of governance, we have devoted ourselves over the past 187 days to restoring daily life and normalizing the nation." This was during the 'Policy Briefing to the People' event commemorating six months since the Lee Jae-myung administration took office. The administration highlighted its achievements in three areas: recovery of the people's economy, normalization of diplomacy and security, and strengthening of national sovereignty, offering a positive assessment of the past half year.
It is not necessarily self-congratulatory for the government to hold a performance briefing at a certain point in time. Sharing the progress of key policies and presenting future directions to the public is meaningful. However, only when honest assessments of reality and alternative solutions are presented together can such briefings be considered truly effective.
However, this event offered little in the way of serious reflection on shortcomings over the past six months or consideration of future challenges. Kim Yong-beom, Chief Policy Secretary at the Office of the President of South Korea, remarked that 'the dual engines of growth—private and public sectors, domestic demand and exports—have performed well,' but did not address the real difficulties faced by businesses and households. Regarding security policy, Wi Sung-lac, National Security Advisor, merely noted, 'We will continue close communication with the United States as a pacemaker and actively pursue inter-Korean dialogue.'
The Korean economy is in no position to be complacent about minor achievements. Beneath the surface, multiple complex risks are lurking. Domestically, the high exchange rate is driving up both producer and import prices, while consumer prices for essentials such as petroleum and food are also rising. Although the unemployment rate remains stable, the number of jobs in construction and manufacturing—traditionally considered employment strongholds—has dropped significantly. Due to high prices, real household income is barely increasing.
Above all, the sensitive issue of housing prices is like a black hole absorbing all other issues. Since the current administration took office, three rounds of real estate measures have been announced, yet price stabilization remains elusive. President Lee recently confessed at a Town hall meeting in Cheonan, South Chungcheong Province, that there is 'no solution' to housing prices. This appears to reflect the difficulty of addressing the concentration of population in the capital region through policy. However, this contradicts his previous remarks emphasizing that 'there are many real estate policies such as demand suppression.' The administration must clarify its policy message and shift toward a supply-oriented approach.
External risks are also significant. Although the immediate threat of U.S. protectionism was alleviated by the Korea-U.S. tariff agreement, the global trade environment remains highly volatile. International organizations such as the International Monetary Fund (IMF) have also expressed concerns about the uncertainties facing the Korean economy. In particular, after next year, when the fiscal deficit-to-Gross Domestic Product (GDP) ratio is expected to exceed 50 percent, fiscal spending may become constrained. The government must proactively prepare measures for a situation in which expansionary fiscal policy, considered a catalyst for growth, is restricted.
Despite these warning signs, the risks that people are ignoring are referred to as 'Gray Rhinos.' It is no exaggeration to say that the Korean economy is currently in a 'Gray Rhino situation,' surrounded by the triple threats of high exchange rates, inflation, and interest rates, yet failing to respond adequately. There is an urgent need for a risk management system that can continuously respond to household debt, housing price volatility, and rapid changes in the global trade environment.