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President Lee Jae-myung presides over a senior secretaries’ meeting at the presidential office in Yongsan on Nov. 13. / Source: Yonhap News

President Lee Jae-myung said Thursday that Korea’s most urgent task is to reverse the steady decline in its potential growth rate and stressed that bold structural reform is essential to achieve it.

Speaking at a senior secretaries’ meeting at the Yongsan presidential office, Lee said, “The biggest challenge Korea faces today is the repeated drop in potential growth every time a new administration takes office,” adding, “To turn this around, we need sweeping structural reforms.”

He emphasized that the recent signs of economic recovery make the timing ideal. “With the spark of economic rebound now lit, this is the right moment for structural reform,” he said. “Through reforms in six key areas — regulation, finance, the public sector, pensions, education and labor — we must raise our potential growth rate.”

Lee urged his aides to ensure that next year becomes the starting point of a major national transformation driven by structural reform. “We need thorough and swift preparation so that next year marks the beginning of Korea’s grand national shift,” he said. “We must open a new path for growth.”

Warning that Korea’s potential growth rate has been falling by “almost one percentage point every administration,” Lee said it could eventually turn negative without decisive action. “We have the responsibility to reverse this trend,” he said. “Structural reform comes with pain. It is not easy. There will be resistance. But we must overcome it.”

Addressing financial reform, Lee said the current system operates like a “financial caste system,” where low-income individuals face disproportionately high borrowing costs. “Financial institutions must also fulfill their public role,” he added.