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Politics

South Korea's Moon cornered by economic woes and rockets

President's early approval rating of more than 80% has fallen by almost half

Moon Jae-in is at risk of becoming a lame duck for the final three years of his presidency.   © Reuters

SEOUL -- North Korea's resumption of missile launches last week was an unwelcome gift to South Korean President Moon Jae-in ahead of the second anniversary of his inauguration on Friday.

Having come to power in 2017 with overwhelming public backing, Moon is now struggling on the diplomatic and domestic fronts. The economy refuses to pick up pace, and as the rockets show, there is no sign that Moon's olive branch to the North has been appreciated.

Moon once commanded a support rate of over 80%, but the latest Gallup Korea poll, in the first week of May, shows approval of the president at 45%. If no signs of success emerge soon, Moon risks becoming a lame duck for his final three years in office (South Korean presidents can serve only one five-year term).

"The ruling party should be concerned about the upcoming general elections next year and the next presidential election in 2022," said Shin Yul, a professor of political science at Myongji University. "The economy is at rock bottom, and it is questionable whether Moon's foreign policy is on the right track."

The economy contracted 0.3% in the first quarter from the previous three months -- the biggest decline in a decade. High levels of youth unemployment, slumping exports, poverty among seniors and criticism of Moon's wealth redistribution policies are conspiring against the president.

Moon pushed through double digit increases in the minimum wage last year and again this year. Although the measures boosted the pay of low-income earners, proprietors of some small shops and companies cut part-time workers to save on labor costs.

Some analysts say Moon's government should have avoided intervening in private markets.

Chu Jin-hyung, an economist who used to work for the World Bank and Hanwha Investment & Securities, said the government deserves criticism for drastically raising the minimum wage, hiring more government officials, turning public sector contract workers into permanent employees and forcing telcos to cut fees.

Having initially vowed to wrestle power away from the country's family-owned conglomerates, known as chaebol, Moon is now reaching out to Lee Jae-yong, the de facto leader of Samsung Electronics. Moon visited the company's campus near Seoul on April 30 to bless the mega-corporation's plan to hire 15,000 workers and invest 133 trillion won ($113 billion) in system semiconductors by 2030.

"Here, Samsung Electronics unveiled its ambitious goal to leap forward to the global No. 1 in the foundry business," Moon said in a speech. "I applaud the great goal, and the government will actively help."

But there are no signs that the economy is about to turn around. Nomura recently cut its 2019 gross domestic product forecast to 1.8% from 2.4%, reflecting the weaker January-March data and poor export numbers.

Oh Suk-tae, an economist at Societe Generale, said Moon's administration should loosen regulations and use expansionary fiscal policies to boost the growth rate.

South Korean President Moon Jae-in and North Korean leader Kim Jong Un take a walk during a summit in Pyongyang in September 2018, in this photo released by North Korea's Korean Central News Agency.   © Reuters

As for North Korea, on Saturday it broke an 18-month hiatus and tested more than a dozen short-range missiles, heightening tensions and telling Moon that peace is a long way off.

Talks with the North are at a stalemate. After three inter-Korean summits initiated by Moon last year, North Korean leader Kim Jong Un appears to have no plan to visit Seoul anytime soon. Instead, Kim last month met with Russian President Vladimir Putin in Vladivostok.

"There is a clear difference between Seoul and Pyongyang on the importance of inter-Korean relations," said Choi Kang, senior researcher at the Asan Institute for Policy Studies. "The government should urge North Korea to take action [toward denuclearization] rather than waiting for North Korea to do so.

"[And it] is necessary to give a strong message over North Korea's short-range missile test on May 4."

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