South Korea’s presidential office has replaced all of its senior secretaries and is expected to carry out a large-scale Cabinet reshuffle. The move comes after top staff left to run for the general elections in April next year.
Government reshuffles are necessary to explore new drive engines but the presidential office should minimize potential disruptions in administrative management.
Key officials are known to be interested in running for a seat at the National Assembly in the general elections next year, including Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, Minister of Land, Infrastructure, and Transport Won Hee-ryong, and Minister of SMEs and Startups Lee Young.
Focus is on whether the chiefs of the Financial Services Commission and Financial Supervisory Service will remain in their positions. There are voices that a reorganization in economic positions should be done with a prudent approach given the various challenges surrounding the economy.
Despite growing prospects of monetary easing by the U.S. Federal Reserve, Korea still suffers sharp price increases and higher interest rates, which hinder consumption and investment, raising concerns about a potential recession.
Overall industrial activity fell 1.6 percent in October from the previous month to log the sharpest on-month decline since April 2020.
All three activities ? output, consumption, and facility investment ? declined for the first time in three months.
The Bank of Korea (BOK) has revised down its economic growth projection for the next year to 2.1 percent. This marks the third downward revision by the central bank for next year’s growth forecast, following adjustments in May and August.
The Korean economy faces additional challenges, including household debt exceeding 1,800 trillion won amid mounting risk of self-employed businesses. The BOK has also increased its consumer price inflation forecast to 2.6 percent from the previous estimate of 2.4 percent for next year.
These developments indicate that the reshuffle faces the critical task of stabilizing financial markets and deploying labor and pension reforms at a time of prolonged low growth.
The presidential office must mitigate potential impacts of the reshuffle on the economy and cabinet altogether by promoting communications between the cabinet and the ruling party.
Ministers engaged in election campaigns should also remain dedicated to their responsibilities until officially stepping down.
By Editorial Team
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