Top aide calls high rates, prices 'cost of success'; ruling party slams 'out-of-body speech'

Kim Yong-beom, a senior secretary to the president for economic affairs, has described South Korea's current economic challenges, high interest rates, high inflation, and a high exchange rate, as "the cost of success." He argued in a Facebook post that these conditions should not be viewed solely negatively, suggesting they are part of an inevitable transition for the Korean economy.

Kim pointed to the nation's nominal growth rate approaching 10%, driven by a surge in corporate profits in sectors like semiconductors and artificial intelligence. He posited that this export-led improvement in trade conditions is leading to a simultaneous rise in corporate profits, wages, and asset prices. According to Kim, the overall price system is adjusting upward, which is not inherently negative but rather a sign of the economy seeking a new equilibrium after a long period of low growth and low inflation. He characterized the current situation not as a precursor to crisis, but as the "friction of leaping forward."

Addressing the high exchange rate, Kim differentiated it from the foreign exchange crisis of the past, attributing it to foreign investors converting profits from a booming stock market rather than a shortage of foreign currency. He suggested this phenomenon reflects Korea's success rather than its vulnerability, emphasizing the need to monitor foreign currency flows and liquidity indicators. Regarding interest rates, he noted that rapid stabilization is unlikely given the overall price adjustments, stressing that the speed and volatility of rate hikes are more critical than the absolute level. For inflation, he acknowledged that supply-side shocks are difficult to control solely with monetary policy and require a comprehensive response, including measures to stabilize energy prices and address market collusion.

Kim urged a shift in perspective, stating that the framework for understanding the Korean economy must evolve alongside its entry into a "new dimension." He cautioned against using outdated methods to interpret the current era, emphasizing the need for a clear-eyed view of the changed reality. However, his remarks drew sharp criticism from the ruling People Power Party. Party leader Jang Dong-hyuk countered that the economy and people's livelihoods are real, not a "cyberspace" explained by a few keystrokes. He accused Kim of attempting to deceive the public with "fancy words" instead of focusing on crisis response. Party spokesperson Park Seong-hoon further lambasted the comments as a "typical wordplay and out-of-body speech" to cover up government incompetence, arguing that the success of a few large corporations should not be used to paint a rosy picture of the entire economy and that the suffering of small business owners and ordinary citizens facing high interest rates and prices cannot be justified as a "cost of success."