Lee calls for aggressive fiscal policy to boost growth

May 12, 2026, 12:56 pm

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President Lee Jae-myung speaks during a Cabinet meeting and emergency economic review session at the presidential office on May 12. /Yonhap

President Lee Jae-myung on Tuesday stressed the need for aggressive fiscal spending to strengthen South Korea’s long-term economic potential, arguing that government investment during times of crisis can lay the foundation for a major economic leap forward.

Speaking during a Cabinet meeting and emergency economic review session at the presidential office, Lee urged government ministries to adopt the policy direction when formulating second-half economic growth strategies and preparing next year’s budget plan.

“Now is the time to build potential through investment, and investment ultimately brings greater returns,” Lee said. “The government should focus its capabilities on laying the groundwork for a major leap in the national economy through active fiscal policy.”

Lee described the current economic environment as a crisis requiring stronger state investment rather than austerity.

“In times like these, saving is important, but it is also necessary to invest in strengthening the nation’s capabilities,” he said.

Lee pointed to the effectiveness of last year’s consumer recovery coupons, saying studies showed they boosted sales for local small businesses by an additional 430,000 won for every 1 million won distributed.

“The research confirmed that proactive and strategic fiscal operations can provide real momentum to the people’s economy,” he said.

Lee criticized calls for fiscal tightening, arguing that concerns over national debt were being used to justify inaction.

“Despite these objective facts, there are still voices repeatedly demanding austerity,” he said. “Using national debt as a pretext is, in effect, an irresponsible argument that tells the government to stand by while people suffer.”

He added that expansionary fiscal policy could ultimately improve the country’s debt ratio by increasing economic growth and expanding the overall size of the economy.

“If active fiscal policy stimulates domestic demand and raises economic growth and GDP itself, the denominator grows and the national debt ratio can actually decline,” Lee explained.

He further argued that stronger investment would improve productivity and potential growth rates, expand the tax base, and create a virtuous cycle in which the debt ratio falls over the long term while the economy’s growth capacity strengthens.

Lee also warned against what he described as “populist austerity arguments that deceive the public.”

“At no point am I saying the government should spend recklessly,” he said. “But this is a time when investment can expand our potential. Because it is a crisis period, investment now can bring even greater rewards later.”

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