Recent forecasts from major domestic and international institutions have raised South Korea's economic growth outlook. The government is promoting a 3.6% growth rate for the first quarter, boosting expectations for economic recovery. Semiconductor exports have reached record levels, and the current account continues to show a significant surplus. The stock market has been on an upward trend, with market capitalization climbing into the global top ranks. Additionally, the national treasury is filling up faster than expected, leading to discussions about potential surplus tax revenue.
On the surface, the numbers suggest that the South Korean economy is clearly in a recovery phase. However, the reality felt by the public is quite different.
In local commercial districts, it is not difficult to find vacant storefronts. Small business owners lament a decline in customers. Construction sites are eerily quiet, and shadows of restructuring loom over regional industrial complexes. Young job seekers report ongoing difficulties in finding quality employment. Ordinary citizens feel the burden of rising prices every time they shop.
There is a growing disconnect between economic indicators and the public's perception of the economy.
What is the reason for this disparity?
The primary cause lies in the semiconductor-centric growth structure. A significant portion of the recent economic momentum in South Korea has stemmed from the semiconductor industry. The expansion of the artificial intelligence (AI) market and increased investments in data centers have led to a surge in demand for advanced semiconductors, including high-bandwidth memory (HBM). The improved performance of semiconductor companies, led by Samsung Electronics and SK Hynix, has driven increases in exports, growth rates, and tax revenues simultaneously.
The issue is that these achievements have not sufficiently spread throughout the broader economy.
While the semiconductor industry is thriving, other sectors are facing starkly opposite realities. The petrochemical industry is struggling with global oversupply and competition from China. The steel industry is confronted with protectionist barriers in the U.S. and Europe. The construction sector is grappling with a real estate slump and issues related to project financing. Small and medium-sized enterprises and self-employed individuals are barely managing under the pressures of high interest rates and labor costs.
As a result, while the semiconductor sector lifts the economy, polarization among industries is deepening.
The growth rate figures also fail to capture this reality. Gross Domestic Product (GDP) is merely an indicator of the overall economic scale and does not directly reflect the quality of life for individuals. Even with high growth rates, if the benefits are concentrated in specific industries and companies, the majority of citizens may struggle to feel the effects of economic recovery.
In fact, the economy as experienced by citizens is determined by factors such as employment, income, prices, and housing costs. If living expenses rise faster than wages, an increase in growth rates becomes just a number in statistics. If exports increase but personal finances do not improve, the notion of economic recovery can feel hollow.
The recent debate over surplus tax revenue should also be viewed in this context. While the potential for increased tax revenue due to the semiconductor boom and rising stock market is evident, an increase in tax revenue does not automatically translate to improved lives for all citizens. The distribution of the fruits of growth is what truly matters.
Economic policy must also confront this reality. It is premature to declare an economic recovery solely based on improved growth rate figures. What is needed now is not just growth itself, but the diffusion of that growth. It is crucial to create policy linkages that allow the successes of the semiconductor industry to benefit small businesses, regional economies, and the domestic market. Efforts must also be made to reduce disparities between industries and expand quality job opportunities.
The semiconductor boom is undoubtedly good news for the South Korean economy, and it is positive that the country maintains competitiveness in the global market. However, the success of the semiconductor industry does not equate to the success of the entire nation. Ultimately, the economy is evaluated through the lens of citizens' lives.
True economic recovery can only be claimed when life improves, not just numbers. When citizens smile rather than statistics, we can genuinely say the economy has recovered. Currently, the South Korean economy must be wary not only of sluggish growth but also of falling into the illusion of growth.
* This article has been translated by AI.
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