President Lee Myung-bak on Saturday set taming inflation and job creation as two of his top goals for 2012 and vowed to reinforce the national defense posture against the hostility shown by North Korea's new leadership.

   "The government will make its utmost efforts to defend the country under any circumstances and to create jobs and tame inflation," Lee said in his New year message.

   Entering his final year in office, Lee said he will "put forth every ounce of my energy to make people feel at ease in their livelihoods." National defense has long been a top priority for South Korea, which shares the world's most heavily armed border with North Korea.

   In his message, Lee didn't mention the power transition in North Korea following the Dec. 17 death of Kim Jong-il but said "the situation on the Korean Peninsula will be fluid next year."

   While wrapping up its official mourning period for Kim, the North's powerful National Defense Commission issued a bellicose statement on Friday, threatening not to deal with the Lee government and ruling out any policy changes.

   While North Korea publicly declared Kim Jong-un, the designated son of the late leader, to be the regime's supreme leader, outside experts remain cautious on whether he will be able to consolidate his grip on power. Little is known about the North's next leader,

who is believed to be in his late 20s, and the succession process has been shrouded in secrecy.

   Inter-Korean ties are currently at one of their lowest levels in years. In its latest hostilities against South Korea last year, North Korea sank a South Korean warship and attacked a border island with artillery fire, killing a total of 50 South Koreans.

   North Korea is expected to outline its policy goals on Sunday in its New Year statement to be carried by the official Korean Central News Agency, state radio and television.

(Yonhap News)