Lee marks 500 days in office amid macro rebound and mounting policy headaches

President Lee Jae Myung marks 500 days in office Friday with a crowded agenda of unresolved challenges. Macroeconomic indicators have rebounded, but controversies over real estate and stock market policy, along with diplomatic friction, have kept his approval rating on a downward drift.

Lee reached the 500-day milestone Friday. Speaking at a senior secretaries meeting at Cheong Wa Dae on Thursday, he said the occasion marked a moment of profound national transition. "Tomorrow, the people's sovereignty government reaches its 500th day. The Republic of Korea stands at a crossroads of great transformation," he said. "At a time like this, we must lower ourselves further, attend to the will of the people, and devote every effort to building better lives and opening a brighter future for the nation." He went on to say the administration would "walk steadfastly down the path of improving livelihoods, pursuing pragmatic reform and achieving inclusive unity, unbowed by any outside pressure or resistance."

Within the ruling camp, the government's most notable achievements over the past 500 days are seen as macroeconomic management and the handling of external risks. Buoyed by global AI demand and a semiconductor boom, major domestic and international institutions — including the IMF, which raised its forecast to 3.3 percent, and the Korea Development Institute at 3.2 percent — have sharply upgraded their growth outlooks for South Korea this year.

The current account is also on track to post an annual surplus in the range of $130 billion to $150 billion, as rising semiconductor prices and higher export volumes have significantly improved the terms of trade, sustaining a large surplus.

Behind the headline figures, however, the gap between macroeconomic data and what ordinary people actually feel remains the government's most pressing problem. Prolonged high inflation and elevated interest rates continue to weigh heavily on the self-employed and lower- and middle-income households. "Even with the strong economic indicators, distribution has been weak, which seems to be why people are not feeling the improvement," a Cheong Wa Dae official said.

Real estate is the government's Achilles' heel. The Lee administration has pushed an aggressive housing policy centered on protecting owner-occupiers and curbing speculative demand, but market sentiment has turned cold. Critics argue that punitive taxation and blanket lending restrictions — at odds with the original goals of managing household debt and ensuring tax fairness — have instead knocked away the ladder for genuine homebuyers and stoked instability in the jeonse and monthly rent market.

The domestic stock market's momentum, which had surged through the early months of the administration and into the first half of this year, has slowed sharply, setting off warning signals. The Kospi, which had set an all-time high on the back of AI semiconductor tailwinds and optimism over capital market reform, has since undergone a steep correction and settled back to around the mid-5,000 range.

Clouds are also gathering over what had been considered a stable diplomatic front. The Lee government had largely put its "pragmatic diplomacy" approach — prioritizing national interest over ideology — on a steady footing. Attendance at the G7 summit and a series of bilateral meetings with leaders of major nations were credited with securing a foothold for South Korean companies amid a reshaping of global supply chains and with navigating a more uncertain trade environment with relative stability. Recently, however, signs of strain in the South Korea-US relationship have grown more prominent, with security and intelligence cooperation on North Korea, economic and trade friction, and questions of diplomatic trust between the two countries becoming entangled.

With the approval rating stuck in the mid-30s — weighed down by sluggish public sentiment despite the macro rebound, the real estate policy controversy and rising stock market volatility — the Lee administration is throwing its full weight behind three priority areas for the second half of its term: housing, jobs and financial support for ordinary citizens. "Cheong Wa Dae and the government must treat these three core social policies as the top national priorities for the remainder of this year and ensure that each project is carried out to the fullest," Lee said. "I ask that you devote every effort to spreading the warmth of growth evenly across our entire society."