It appears that the entire country has stood still these days as the Constitutional Court’s ruling on the fate of suspended President Yoon Suk Yeol is widely expected to be made soon. In reality, however, the people of South Korea have never done so or cannot afford to do so because they have to work hard to make a living.

There are exceptions, though. Politicians from all sides are behaving as if they have come from outer space to enjoy some sporting events without worrying much about the daily lives of the people. They appear to be busy every day doing something very important, but to be sure, they are not doing it for anyone but themselves.

On one hand, it is easily understandable because politicians may have to prepare for an early presidential election later this year should the Constitutional Court approve the parliament’s impeachment motion to remove Yoon from power ahead of schedule. There is no denying that an election is such an important procedure that South Koreans held a presidential election even during the 1950-53 war with North Korea.

However, the situation facing South Korea at present is so grave that even an upcoming election cannot be an excuse for politicians neglecting their duty of caring for the general public at a time when the two most important administrative positions remain vacant following the parliamentary votes to impeach them.

The biggest threat facing the country is economic. South Korea’s economy is hardly in a crisis by conventional standards because it is still free of major corporate failures or high unemployment, but I think it is going through a far more serious and dangerous period than during such a crisis as after the collapse of Lehman Brothers in the United States in 2008 or during the height of the COVID-19 pandemic.

A series of indicators tell the seriousness of South Korea's troubles with domestic demand. Most recently, Statistics Korea data showed the number of self-employed people — most of them running small shops — shrank to 5.5 million in January from 5.57 million in December 2024. It was the smallest number since January 2023, when the country had not fully recovered from the COVID-19 pandemic.

While the poor showing in the self-employed population foretells what domestic retail sales will look like in the coming months, another indicator from the statistics agency already well demonstrates the serious slump in the wholesale and retail businesses. The wholesale and retail business output index dived 4.0 percent in January from the previous month after a seasonal adjustment, recording its worst monthly drop since February 2019.

This means that the added value generated in this segment during the first month of this year declined at a faster pace than in any month at the height of the COVID-19 pandemic. This is especially worrying when we take into account the increasingly uncertain prospects for exports, not only in cyclical terms for South Korea or for any individual industries but in structural terms after US President Donald Trump’s tariff hikes.

Economic outlook downgraded sharply

South Korea’s economy is heavily dependent on exports mainly because consumer spending is closely linked to the business performance of export industries, notably the semiconductor, automobile and industrial equipment sectors. In other words, the service sector — including wholesale and retail businesses — cannot play the role of balancing the cyclical downturn in trade.

While there’s nothing seriously wrong with an economy like South Korea's having greater exposure to exports than to domestic service businesses, this is by no means a welcome situation. This unbalanced economic structure partly explains why South Korea’s economy is still considered an emerging economy despite its size and level of income per head, and why its economy remains more vulnerable to events outside the country than it ought to be.

A more balanced structure in an economy between domestic and external business sectors is important because such a structure could make the economy grow at a steady pace regardless of the trend outside the country. In such a country, domestic service businesses can make up for the slowing growth when global trade takes a downturn in a cyclical sense.

In this regard, recent remarks by the head of the Bank of Korea while presenting a more pessimistic projection for this year’s economic growth provide a lot of arguments to think about. Speaking at a news conference late last month on the central bank’s monetary policy settings, Gov. Rhee Chang-yong emphasized that South Koreans should acknowledge and accept the reality that their economy cannot grow faster than it is now because of the failure to implement structural reforms for many years.

The remarks came when Rhee explained his bank’s downgrade of its economic growth forecast for this year to 1.5 percent from 1.9 percent set in November 2024. It was an unusually big reduction in the central bank’s growth projections made for the current year in just three months. It was also an unusual downgrade made in just one month after the central bank unofficially presented growth of 1.6-1.7 percent in January.

On the surface, Rhee criticized the failure of South Korea to implement structural reforms across the economy and its continued dependence on “traditional industries” for the disappointing growth potentials. Therefore, he said it was “our ability” that South Koreans should accept the weakening growth potential year by year.

He stopped short of criticizing any specific group of professionals for the disappointing and continuously weakening “ability” of South Korea, but I feel from his overall argument that the seriously underdeveloped politics is mainly to blame for the economic structural problems.

The ruling and opposition parties have been unable to make progress in negotiating a supplementary budget bill for many weeks, during which they did nothing but exchange words having little to nothing to do with the livelihood of the general public. At this point, it’s the Constitutional Court that will make the decision on Yoon's impeachment, which will affect the political agenda for the coming months and years.

Caring about people’s lives is all the political parties should do until then. Sadly, South Korean politicians are not doing this, and this is all “your ability.”

Yoo Choon-sik

Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer’s own. -- Ed.