Park Geun-hye assumed the South Korean presidency in February promising to open an “era of people’s happiness” through additional social spending of Won130tn ($121bn) over her five-year term – without raising taxes. Economists were dubious, with many saying it was only matter of time until the government backtracked on the pledges that helped Park win last year’s election.
That day duly arrived on Thursday, with the publication of a budget that whittled away several of the spending promises.
When it comes to passion for their children’s education, South Korean parents have few rivals. They will often go to extreme lengths to secure the best education for their offspring, in a society where academic credentials generally take precedence over other merits.
Lee Jae-yong, Samsung Group’s heir, is no exception. He had to issue an apology on Thursday amid growing controversy over his son’s entrance to one of the country’s top prep schools.
South Korea’s new president, Park Geun-hye, has promised $125bn of extra social spending over five years, hoping to fulfil campaign pledges to address growing inequality. The FT’s Simon Mundy reports from Seoul.
South Korea’s inflation unexpectedly slowed last month on weak domestic demand, despite a pickup in manufacturing activity, giving room for the Bank of Korea to cut interest rates further.
But will the central bank do so at its next meeting on March 14? Most economists seem to think not.
The snowflakes drifting earthwards made for a pretty sight in Seoul this week. But they had a darker aspect for many residents concerned about their toxic properties, as worries continue about South Korea’s vulnerability to air pollution in nearby China.
Much of eastern China has experienced its worst smog for years over the past week, caused largely by the past decade’s huge increase in coal usage by factories and power plants, as well as emissions from the rapidly growing number of motor vehicles. Since Saturday, South Korea has also suffered an acute rise in air pollution – albeit not to the same levels of Beijing – and local media, as well as government officials, are pinning the blame on China.
South Koreans have grown familiar with the sight of prominent businessmen being convicted of fraud, only to steer clear of jail. So the imprisonment last August of Kim Seung-youn, chairman of the major conglomerate Hanwha (pictured left being arrested for a separate incident), raised hopes of a shift in the treatment of high-profile wrongdoers.
Now, suspicious types might fear a return to lenient practices, after Kim was released this week due to health problems.
As South Koreans prepare to elect a new president, two of the leading candidates are promising greater income equality and stricter controls on big business. The FT’s Simon Mundy reports on one of the most gripping elections in the nation’s 25 years of democracy.
Politics matter for Korean deals. The sale of a stake in Korea Aerospace Industries, the country’s sole aircraft maker, has failed again after Korean Air withdrew.
The airline said it decided not to bid for the $1.1bn stake in KAI because of the high price tag, although it was still interested in buying the aircraft maker at a “proper” price to nurture the country’s aerospace industries as its new growth driver.
Investors don’t seem to mind North Korea’s missile threat that much. South Korean shares rose to a six-week high on Monday, despite North Korea’s announcement that it will fire a rocket in December for the second time this year.
The latest threat from North Korea may affect the country’s upcoming presidential election by boosting the popularity of the conservative candidate Park Geun-hye – but has failed to make an impact on the country’s financial markets.