South Korea’s ex-top prosecutor launches bid for presidency

South Korea’s former top prosecutor has launched a campaign to become president of Asia’s fourth-biggest economy in an election next year that will focus on discontent over rising inequality and corruption allegations.

Yoon Seok-youl has emerged as a popular opposition figure after resigning in March following clashes with President Moon Jae-in over justice system reforms.

Moon and the ruling progressive Democratic party have faced rising criticism for failing to deal with soaring house prices and as the job market, particularly for younger workers, struggles to recover despite booming exports.

The presidential election is expected to be decided on local issues but will have far-reaching ramifications. Progressive leaders have traditionally favoured engagement with North Korea, closer ties with China and a tougher approach to Tokyo.

Yoon said justice and the rule of law were demolished by the Moon administration, as he criticised the government for failed economic policies that have led to asset bubbles and high youth unemployment.

“The cartel of small interest groups made by the incumbent administration and its related people has privatised power,” he told a news conference on Thursday to launch his candidacy. “The government is trying to extort people by extending its reign.”

Yoon is the first serious presidential candidate to officially join the race, which is likely to heat up in the coming weeks with other officials, such as Lee Jae-myung, the Gyeonggi province governor, expected to announce their bids.

Yoon, who led a sweeping probe into former president Park Geun-hye’s corruption scandal in 2016, won popularity among conservatives with his investigations into Moon’s political aides and government officials.

Experts said economic issues were likely to be the deciding factor for the election as Moon’s five-year term ends next May.

The president’s approval ratings have fallen on public anger against growing income inequality and his failure to rein in the soaring property market, according to local polls. Apartment prices in Seoul have risen 88 per cent and 57 per cent nationwide since Moon took office, according to KB Bank data. 

Moon has touted strong economic growth this year, driven by a sharp rebound in exports and corporate investment, although domestic consumption remains sluggish.

The government plans to draw another extra budget worth Won33tn ($29.2bn) to spur consumption and support small businesses, according to Park Wan-joo, head of the ruling Democratic party’s policy committee.

The supplementary budget will be used for offering pandemic relief handouts to 80 per cent of households and cash rebates on credit card spending, the ruling party said.

The finance ministry expects the country’s economy to grow 4.2 per cent this year, a percentage point higher than its previous projection made at the end of last year.

The budget proposal will be submitted to parliament on Friday. It will be South Korea’s sixth extra budget since the country was hit by the pandemic.

“Cash handouts are the best way to spur consumption quickly when the service sector remains in the doldrums due to distancing measures,” said Park Chong-hoon, head of research at Standard Chartered in Seoul.

Some analysts expect the Bank of Korea to raise interest rates by 25 basis points from the record low of 0.5 per cent in the fourth quarter to curb rising apartment prices.

“Soaring house prices have become the biggest political issue for the election. Authorities are keen to tackle asset bubbles with higher interest rates even if it means a delayed consumption recovery,” Park said.