President Lee Calls for Expansionary Fiscal Policy at a Time of Crisis

Why It Matters

Lee’s push for stimulus could boost domestic demand and lower the debt ratio, reshaping South Korea’s growth strategy during a downturn.

Key Takeaways

• President Lee urges shift from saving to consumer spending.
• Calls for active fiscal stimulus to boost domestic demand.
• Argues stimulus can raise GDP and lower debt‑to‑GDP ratio.
• Warns against austerity traps and predatory lending practices.
• Emphasizes growth‑focused investments to revive economic momentum nationwide.

Summary

President Lee called for an expansionary fiscal policy, urging South Korea to move from a culture of thrift to one of consumption as the engine for growth amid the current economic crisis.

He argued that active government spending would stimulate domestic demand, lift GDP, and paradoxically reduce the debt‑to‑GDP ratio by expanding the denominator. Lee warned that populist austerity measures trap the economy and that predatory lending harms low‑income borrowers.

Lee quoted the old Korean adage that saving once was a virtue, but now “consumption is the virtue of the age.” He cited examples of exploitative banks targeting vulnerable borrowers, calling such practices “predatory financing.”

If implemented, Lee’s policy could revive growth, improve fiscal sustainability, and reshape political debate on fiscal discipline, signaling a shift toward demand‑driven recovery for businesses and households.

Original Description

이 대통령 "적극재정 기조 경제성장 대도약 마련… 포퓰리즘적 긴축재정 함정 안 돼"

President Lee Jae Myung believes consumption will create momentum for growth.

This belief was shared on this Tuesday as he urged for transition from saving to spending for economic strength.

Our Blue House correspondent Yoon Jung-min reports.

Making more investments to prop up economic growth.

That was what President Lee Jae Myung called for on Tuesday at the Cabinet-slash-emergency economic meeting, as he assessed that the current conditions constitute an emergency that requires expansionary fiscal policy.

"There once was a time when thrift was a virtue. We spared, saved resources and tightened our belts. Now, spending is a virtue."

As he noted the economic impact of the consumption vouchers distributed last year, the president urged officials to ensure that active fiscal policy is reflected in the growth strategy plan for the latter half of the year as well as next year's budget planning.

He said critics calling for government belt-tightening were "irresponsible" and were turning a blind eye to people's hardships.

"We must not be ensnared in populist belt-tightening theory. When we stimulate domestic demand, raise economic growth rates and GDP through active fiscal policy, it will increase the denominator and lower the nation's debt rate."

Lee said South Korea's net debt amounts to around 10-percent of its GDP, adding that its debt structure is sturdier than its global peers.

He was referring to last month's IMF Fiscal Monitor.

Economic challenges were prominent, such as addressing what the president called predatory financing, citing certain cases where low-income borrowers were being exploited by what are called "bad banks."

All this, as tensions in the Middle East show no clear sign of ending.

South Korea continues its efforts to cushion the impact on the economy, while at the same time, bracing for a renewed economic order after the war.

Yoon Jung-min, Arirang News.

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2026-05-12, 17:00 (KST)