South Korea's New President Lee Jae-myung Vows Economic Revival, Judgment On Martial Law

Summary:

South Korea woke on Wednesday to a new liberal president, Lee Jae-myung, who vowed to raise the country from the turmoil of a martial law crisis and revive an economy reeling from slowing growth and the threat of global protectionism.

Lee's decisive victory in Tuesday's snap election stands to usher in a sea change in Asia's fourth-largest economy, after backlash against a botched attempt at military rule brought down Yoon Suk Yeol just three years into his troubled presidency.

With 100% of the ballots counted, Lee had won 49.42% of the nearly 35 million votes cast while conservative rival Kim Moon-soo had taken 41.15% in the polls that brought the highest turnout for a presidential election since 1997, according to National Election Commission data.

The 61-year-old former human rights lawyer called Tuesday's election "judgment day" against Yoon's martial law and his People Power Party's failure to stop the ill-fated move.

"The first mission is to decisively overcome insurrection and to ensure there will never be another military coup with guns and swords turned against the people," Lee said in a victory speech outside parliament.

"We can overcome this temporary difficulty with the combined strength of our people, who have great capabilities," he said.

Lee was officially confirmed as president by the National Election Commission on Wednesday and immediately assumed the powers of the presidency and commander in chief.

An abbreviated inauguration is planned at parliament at 11 a.m. (0200 GMT), an Interior Ministry official said.

Item 1 of 2 Lee Jae-myung, the presidential candidate for South Korea's Democratic Party, waves as he leaves to meet his supporters, in Incheon, South Korea, June 3, 2025.

[1/2]Lee Jae-myung, the presidential candidate for South Korea's Democratic Party, waves as he leaves to meet his supporters, in Incheon, South Korea, June 3, 2025. REUTERS/Kim Soo-hyeon REFILE - CORRECTING INFORMATION Purchase Licensing Rights, opens new tab

A daunting slate of economic and social challenges await the new leader, including a society deeply scarred by divisions following the martial law attempt and an export-heavy economy reeling from unpredictable protectionist moves by the United States, a major trading partner and a security ally.

The government under a caretaker acting president had made little progress in trying to assuage crushing tariffs announced by U.S. President Donald Trump's administration that would hit some of the country's major industries, including autos and steel.

"President Lee will find himself with little to no time to spare before tackling the most important task of his early presidency: reaching a deal with Trump," the Washington-based Center for Strategic and International Studies said in an analysis.

The White House said the election of Lee was "free and fair" but the United States remained concerned and opposed to Chinese interference and influence in democracies around the world, according to a White House official.

The alliance between the U.S. and South Korea remains "ironclad," the official said.

Lee has expressed more conciliatory plans for ties with China and North Korea, in particular singling out the importance of China as a major trading partner while indicating reluctance to take a firm stance on security tension in the Taiwan strait.

Still, Lee has pledged to continue Yoon's engagement with Japan and said the alliance with the United States is the backbone of South Korea's global diplomacy.

The martial law decree and the six months of ensuing turmoil, which saw three different acting presidents and multiple criminal insurrection trials for Yoon and several top officials, marked a stunning political self-destruction for the former leader and a drag on an economy already slowing in growth.

Lee has pledged to boost investment in innovation and technology to fuel the country on another growth trajectory while increasing support for middle and low-income families.

Reporting by Joyce Lee, Ju-min Park, Daewoung Kim, Yeobin Park, Hyunsu Yim, and Ju-min ParkAdditional reporting by David Brunnstrom and Jeff Mason in WashingtonWriting by Jack Kim, Ed Davies, Josh SmithEditing by Sandra Maler

Source: Reuters

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Oliver Scott

South Korean stocks and won gained, as Lee Jae-myung’s widely-expected win in the presidential election ended a months-long political leadership vacuum.

The nation’s stock benchmark Kospi jumped 1.5%. The won rose 0.3% against the dollar on Wednesday, extending its rally into a second trading session.

The election outcome removes one of the biggest overhangs impacting the local market — how the country proceeds politically after former President Yoon Suk Yeol’s brief imposition of martial law last year, which led to his ouster and Tuesday’s snap election.

Market focus now turns to Lee’s policies aimed at shoring up growth, centered on more government spending, improved corporate governance and stronger labor protections, as well as wrapping up ongoing tariff negotiations and currency talks with the Trump administration. Korea’s economy contracted in the first quarter, underscoring its weakness even before US President Donald Trump’s announcement of tariff hikes in early April.

Despite political uncertainties and a sluggish economy, Korean stocks and the won have shown resilience this year, outperforming most of their Asian peers. The won got support after Yoon was removed in April, and it’s one of Asia’s best performers.

“Clearly South Korea expects and hopes to put this chapter behind them, and global investors just are looking for more clarity,” Massimiliano Bondurri, SGMC Capital’s founder and chief executive, said in a Bloomberg TV interview Tuesday. “That’s why you’ve seen a strong rally up to now. And we think that could continue.”

READ: South Korea Elects Lee President, Capping Six Months of Chaos

Kospi has risen about 12% year-do-date before the election, reflecting investors’ scouring for value after it dipped into a bear market earlier this year on concerns over US tariffs. The gauge was strengthened by the rallies in industrial and energy sectors, including nuclear energy stocks, shipbuilders and arms exporters.

Financial stocks also contributed to Kospi’s surge in the run-up to the election on bets that corporate reform policies pledged by the candidates would bear fruit.

Source: Bloomberg Europe

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Daniel Carter

Political

The Israeli military said in a statement it struck weapons belonging to the Syrian regime in southern Syria, in a second attack that Israel launched after reporting two projectiles were fired from Syria on Tuesday.

It was not immediately clear who was responsible for the two projectiles.

Syrian state news agency and security sources reported a series of Israeli strikes, the first major ones in nearly a month, targeting several sites in the Damascus countryside and Quneitra and Daraa.

The Israeli Defense Minister Israel Katz had said earlier that he held Syrian President Ahmed al-Sharaa responsible for the two projectile launches.

"We consider the president of Syria directly responsible for any threat and fire toward the State of Israel, and a full response will come soon," Katz said.

The Syrian foreign ministry said in a statement that reports of the launches towards Israel had not been verified yet and reiterated that Syria has not and will not pose a threat to any party in the region, the state news agency SANA reported.

"We believe that there are many parties that may seek to destabilize the region to achieve their own interests," the Syrian foreign ministry added.

Syria and Israel have recently engaged in direct talks to ease tensions, a significant development in relations between states that have been on opposite sides of conflict in the Middle East for decades.

The Israeli military earlier said that two projectiles crossed from Syria towards Israel and fell in open areas.

Several Arab and Palestinian media outlets circulated a claim of responsibility from a little-known group named "Martyr Muhammad Deif Brigades," an apparent reference to Hamas' military leader who was killed in an Israeli strike in 2024.

Syrian state media earlier reported an Israeli strike in the southern Daraa province, an attack the Syrian foreign ministry later said resulted in "significant human and material losses."

Local residents said Israeli mortars were striking the Wadi Yarmouk area, west of Daraa province, near the border with the Israeli-occupied Golan Heights.

The area has witnessed increased tensions in recent weeks, including reported Israeli military incursions into nearby villages, where residents have reportedly been barred from sowing their crops.

Israel has waged a campaign of aerial bombardment that destroyed much of Syria's military infrastructure.

It also has occupied the Syrian Golan Heights since the 1967 Arab-Israeli war and taken more territory in the aftermath of Syrian President Bashar al-Assad's ouster in December, citing lingering concerns over the extremist past of the country's new rulers.

Around the same time that Israel reported the projectiles from Syria, the Israeli military said it intercepted a missile from Yemen.

Yemen's Iran-aligned Houthis said they targeted Israel's Jaffa with a ballistic missile. The group says it has been launching attacks against Israel in support of Palestinians during the Israeli war in Gaza.

Source: Reuters

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Daniel Carter

Economic

As Statista's Felix Richter reports, in its latest Economic Outlook, published on Tuesday, the OECD slashed its global growth forecast for 2025 from 3.3 percent in December 2024 and 3.1 percent in March 2025 to just 2.9 percent, assuming that tariff rates effective as of mid-May will remain in place through 2026.

Unsurprisingly, the U.S. and its main trade partners China, Canada and Mexico are expected to be most affected by the tariffs, with U.S. GDP growth expected to slow sharply from 2.8 percent in 2024 to 1.6 percent this year and 1.5 percent in 2026.

This is down from December projections of 2.4 and 2.1 percent, highlighting the adverse effect that Trump’s tariff policy is expected to have on the American economy.

"The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” OECD Secretary-General Mathias Cormann said.

“Our latest economic outlook shows that today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects."

The effect of the new trade barriers is expected to be most severe through 2025, as global growth is expected to slow to 2.6 percent by the fourth quarter of this year, before gradually climbing back to 3.0 percent by the end of 2026.

“Policy has a crucial role to play to tackle uncertainty and boost growth,” the OECD’s chief economist Álvaro Pereira wrote in an editorial accompanying the report.

“First and foremost, it is essential to avoid further trade fragmentation and trade barriers. Agreements to ease trade tensions and lower tariffs and other trade barriers will be instrumental to revive growth and investment and avoid rising prices,” Pereira said.

If trade barriers aren’t lowered, he warned, the growth impact would be “quite significant” with “massive repercussions for everyone.”

Source: Zero Hedge

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Manuel

Political

Commodity

Senior Ukrainian officials visited Washington on Tuesday to seek U.S. support against Russia while accusing Moscow of dragging its feet at peace talks.

Kyiv showed its ability to continue fighting by setting off an explosive device under a bridge that has become a symbol of the Kremlin's claims on Ukrainian territory.

President Volodymyr Zelenskiy said a Russian artillery strike killed four people in the northern Ukrainian city of Sumy, an area where Russian forces have been making advances.

Zelenskiy's chief of staff, Andriy Yermak, writing on Telegram after meeting U.S. Ukraine envoy Keith Kellogg, accused Russia of "playing for time, manipulating the talks, trying to avoid U.S. sanctions and not wanting a ceasefire."

Ukrainian Foreign Minister Andrii Sybiha was more blunt, saying Russia had ignored a request to comment on Ukraine's proposals at Monday's second round of direct peace talks in Istanbul.

"We demand Russia’s reply. Each day of silence from them proves their wish to continue the war," Sybiha wrote on social media.

Russia, hesaid, had "passed a set of old ultimatums that do not move the situation any closer to true peace."

Yermak, in the United States with Deputy Prime Minister Yulia Svyrydenko, also said he briefed U.S. envoy Steve Witkoff "on the real situation on the battlefield" and invited him to visit Ukraine "to witness the situation firsthand."

"We need a ceasefire — we have fully supported the U.S. proposal on this since March. We are also ready for a leaders’ meeting, which Russia continues to avoid," he said.

A U.S. official said Yermak was scheduled to meet with U.S. Secretary of State Marco Rubio on Wednesday.

Yermak said officials would also discuss a deal that gives the U.S. preferential access to new Ukrainian mineral projects and sets up an investment fund that could be used for reconstruction.

Monday's talks in Istanbul made little headway toward ending Russia's war in Ukraine, apart from an exchange of proposals and an undertaking to conduct a new large-scale swap of prisoners of war.

Moscow has responded to accusations of foot-dragging by saying Ukraine is not making a genuine effort to seek peace.

At the talks, Russia told Ukraine it would agree to end the war only if Kyiv gives up big new chunks of territory and accepts limits on the size of its army. Ukraine rejects the Russian conditions as tantamount to surrender.

"The (peace) settlement theme is extremely complex, it consists of a large number of nuances...," said Kremlin spokesman Dmitry Peskov, adding that "it would be wrong to expect any immediate solutions and breakthroughs here".

It was not clear what would be the next step in negotiations between Russia and Ukraine, but Moscow said early on Wednesday that Istanbul will remain the venue for future talks.

COORDINATED ATTACKS

Kyiv launched in recent days what appeared to be one of its biggest waves of coordinated attacks of the conflict.

Ukraine's SBU security service said it had hit a road and rail bridge that links Russia and Crimea below the water level with explosives. The extent of any damage was not clear and Russian officials later said vehicle traffic had resumed.

The bridge is a flagship project for Russian President Vladimir Putin, built after he annexed Crimea from Ukraine in 2014, a precursor to the latest conflict.

Russian officials also announced that emergency crews had restored power to some 700,000 customers in Russian-controlled areas of southern Ukraine - in Zaporizhzhia and Kherson regions - after drones and shelling had knocked out substations and other infrastructure.

Ukraine's attack on Russian-occupied territory in the Zaporizhzhia and Kherson regions followed multiple Russian attacks on Ukrainian energy infrastructure that have at times left millions of Ukrainians without power.

The latest attacks followed drone strikes over the weekend on Russian military airfields, some of which housed long-range nuclear-capable bombers.

Ukraine's success in striking deep into Russia has prompted calls by some Russian military bloggers for a harsh response.

Zelenskiy denounced the Russian military strike on Sumy, describing the incident as: "all one needs to know about the Russian wish to end this war."

He also announced a military shakeup, including the appointment to a new post of a commander who resigned over a deadly Russian attack on a training area.

Zelenskiy, speaking in his nightly video address after a meeting of top commanders, said the reshuffle sought to ensure that the military remained focused on combat more than three years after Russia's invasion of its smaller neighbour.

Source: Reuters

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Manuel

Economic

Political

Donald Trump ally Elon Musk lambasted the president’s signature tax bill as a budget-busting “abomination” as Republican fiscal hawks stepped up criticism of the massive fiscal package.

The tech titan’s public condemnation pits him against the president at a critical time as Trump is personally lobbying holdouts on the bill. The remarks could stiffen resistance and delay enactment of the tax cuts and debt ceiling increase.

“This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination,” Musk wrote in a social media post. “Shame on those who voted for it.”

Musk attacked the legislation days after leaving a temporary assignment leading the administration’s Department of Government Efficiency initiative to cut federal spending. The Tesla Inc. chief executive officer’s high-profile role in the Trump administration eroded his business brand and sales of his company’s electric vehicles plunged.

White House Press Secretary Karoline Leavitt brushed aside the criticism.

“The President already knows where Elon Musk stood on this bill. It doesn’t change the president’s opinion. This is one big, beautiful bill and he’s sticking to it,” she told reporters on Tuesday.

One Republican fiscal hawk, Senator Mike Lee of Utah, appeared to endorse Musk’s criticism, highlighting the risk that the tech leader’s public stance will complicate passage.

“The Senate must make this bill better,” Lee said in a response to Musk’s post.

House Speaker Mike Johnson called Musk’s criticism “very disappointing.” Treasury Secretary Scott Bessent backed the legislation.

“It’s one big beautiful bill,” he said after a meeting Tuesday with Senate Majority Leader John Thune.

The House-passed tax bill is forecast to bring down federal revenue by about $4 trillion over a decade, adding about $2.5 trillion to the federal deficit over the period even with hundreds of billions of dollars in cuts to safety-net programs such as Medicaid and food stamps.

The measure also would aggressively phase out Biden-era tax breaks for electric vehicle purchases and clean energy production, changes that Tesla has criticized.

“Abruptly ending the energy tax credits would threaten America’s energy independence and the reliability of our grid,” Tesla Energy, the company’s division focused on solar systems and batteries, wrote in a social media post. The message was later signal boosted by Musk himself.

Musk also has publicly disagreed with Trump over tariffs, telling investors during a Tesla earnings call in April that he would advocate “for lower tariffs rather than higher tariffs.”

Trump attacked fiscal conservative Rand Paul earlier Tuesday as “crazy” as the president pressed reluctant Republican senators to move forward swiftly with his tax and spending package.

The Kentucky senator earlier said on CNBC that he wouldn’t vote for the president’s signature legislation because it would increase the legal US debt limit.

“I’m just not for that. That’s not conservative,” said Paul, who also has argued the tax measure would add too much to the national debt.

Trump quickly responded with a series of social media posts, saying the senator “never has any practical or constructive ideas. His ideas are actually crazy (losers!)”

Thune said the debt ceiling has to be raised and “failure is not an option.” The Treasury Department estimates the US will run out of borrowing authority in August or September.

Thune acknowledged it will take time to resolve conflicting demands from the Senate’s 53 Republicans and assemble a package acceptable to a majority of the 100-member body. All Democrats are expected to oppose the legislation.

“We’ve got to get to 51, so we’ll figure out the path forward to do that over the next couple of weeks,” Thune told reporters.

Trump plans to meet with Republican members of the Senate Finance Committee at the White House Wednesday to discuss the legislation, said people familiar with the matter.

While most outside economists have forecast the House version of the legislation would add trillions of dollars to the US debt over 10 years, the White House has claimed that the tax bill would pay for itself in part through economic growth.

Trump and Republican leaders have said they have no choice but to add the debt ceiling to the tax bill in order to ensure smooth passage and avoid a payment default as soon as August.

Paul posted a response to Trump, saying he favors the tax cuts but “I also want to see the $5 trillion in new debt removed from the bill,” adding at least three other Republican senators agreed with him, enough to block the legislation.

But other conservative bill holdouts stopped short of saying they would oppose any debt ceiling increase in the bill. Florida Senator Rick Scott said that he wants to balance the budget to avoid raising the debt ceiling in the future, but noted he voted for a budget outline allowing a debt ceiling increase. Ron Johnson of Wisconsin said he could support a smaller one-year debt ceiling increase in exchange for large spending cuts.

Source: Bloomberg

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Adam

Economic

Stocks

Deutsche Bank has raised its year-end target for the S&P 500 (^GSPC) to 6,550 from 6,150, citing lower tariff-related earnings drag and a resilient economy, in a move that comes amid a broader wave of target upgrades by major Wall Street brokerages.

This follows similar moves by Goldman Sachs and UBS Global Wealth Management, which raised their forecasts in May, with RBC Capital Markets joining the trend on Monday.

"We now see the tariff drag at only about one-third of what we previously penciled in," Deutsche Bank strategists led by Binky Chadha wrote in a note on Monday.

The new target is 10.35% above the S&P 500 index's last close of 5,935.94.

The S&P 500 posted its strongest monthly gain since November 2023 in May, boosted by U.S. President Donald Trump's softer stance on tariffs, strong corporate earnings, and tame inflation data that helped markets recover from April's decline.

Still, the European brokerage warned that the rally could be volatile, with potential pullbacks driven by renewed trade tensions.

"We expect the rally to be punctuated by sharp pullbacks on repeated cycles of escalation and de-escalation on trade policy", the brokerage said.

Deutsche also increased the estimate for the index's earnings per share to $267 from $240.