Political uncertainty falls to pre-martial law levels in wake of presidential election, BOK data shows

Korea’s political uncertainty index has fallen to a level seen before the Dec. 3 martial law declaration, signaling a partial easing of domestic political instability following the presidential election, according to data from the Bank of Korea.

People shop at a supermarket in Seoul on June 5. [NEWS1]

Korea’s political uncertainty index has fallen to a level seen before the Dec. 3 martial law declaration, signaling a partial easing of domestic political instability following the presidential election.

According to data the Bank of Korea (BOK) submitted to Rebuilding Korea Party Rep. Cha Gyu-geun, a member of the National Assembly’s Strategy and Finance Committee, the political uncertainty index stood at 1.5 as of Thursday — the day after President Lee Jae-myung was inaugurated — based on a seven-day moving average.

The index, which tracks the number of media articles containing both the words “politics” and “uncertainty,” surged following former President Yoon Suk Yeol’s declaration of martial law last year, peaking at a record high of 12.8 on Dec. 14, 2024, the day Yoon was impeached by parliament.

However, it began to decline ahead of the presidential vote, reaching 0.7 between May 24 and 26 — the lowest level since Dec. 3 of last year, just before Yoon imposed martial law, when it stood at 0.5.

The index represents a relative value, assuming the long-term average from Jan. 1, 2000, to the present is zero. Although the index ticked up slightly after the election, the BOK said the fluctuation was minor and not meaningful.

The previous record was 8.8 on March 17, 2004, shortly after the impeachment motion of the late President Roh Moo-hyun was passed in parliament. It climbed to 6.2 on Dec. 13, 2016, following the parliamentary passage of the impeachment motion of former President Park Geun-hye.

Eased political tensions are also supporting a recovery in the value of the local currency. On Thursday, the won closed at 1,358.9 to the dollar on the Seoul foreign exchange market, the strongest level in seven months since Oct. 15 last year, when it closed at 1,355.9.

BOK Gov. Rhee Chang-yong said in a May 29 briefing that “much of the political uncertainty that has constrained us for the past six months has eased” and that political factors are no longer influencing exchange rate fluctuations. He added that the exchange rate will remain more sensitive to external factors than to domestic ones.

Meanwhile, expectations that the new administration will boost the domestic economy — including through a supplementary budget — are lifting consumer sentiment.

According to the BOK, the Composite Consumer Sentiment Index in May rose to 101.8, surpassing the neutral benchmark of 100 for the first time in a year. The figure was up 8 points from April’s 93.8, marking the sharpest monthly increase in four years and seven months.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY KIM KYUNG-HEE [shin.minhee@joongang.co.kr]