A year after Lee Jae-myung took office in the aftermath of South Korea's gravest political crisis in a generation, the economy he inherited in a state of shock has staged a clear recovery. Growth rebounded to 3.6% in the first quarter, the benchmark KOSPI index broke through 7,000 for the first time, and consumer inflation has settled at 2.6% — below the OECD average and beneath the rates in the United States, Britain, Germany and Australia.
The starting point makes the turnaround more striking. Lee's government took power amid the wreckage of the December 2024 martial-law declaration and the impeachment turmoil that followed, an episode that froze consumption and investment and shredded political trust. The damage showed up in the data: growth in the first half of 2025 came in at just 0.3% year on year, the mark of an economy that had effectively seized up.
That the recovery has come without an inflationary surge is the achievement the government is keenest to advertise. Holding price growth at 2.6% while output accelerated has spared households the squeeze that has dogged much of the developed world, and has given the Bank of Korea room to support the rebound rather than choke it off. For an export-driven economy exposed to every twist in global demand, the combination of firm growth and contained prices is an unusually favourable one.
The stock market's climb past 7,000 has become the most visible emblem of the shift in sentiment. The index's ascent reflects both the broader global rally in technology and semiconductor shares — the heart of Korea's export machine — and a domestic re-rating as investors concluded that the political emergency had passed without lasting institutional damage. The rebound in confidence has fed back into the consumption and investment figures that had collapsed during the crisis.
Challenges remain stubborn beneath the headline numbers, from an ageing workforce and strained household debt to the perennial uncertainty of relations with North Korea and the trade pressures emanating from Washington. But the first-year scorecard hands Lee a politically valuable story: a government that took office amid genuine fear of a prolonged slump and can now point to growth, record equities and the lowest inflation among major economies as evidence that the worst has passed.