[Editorial] The New Government’s 3% Potential Growth Rate Target: Expectations and Hopes

- Growth is only possible when an environment is created in which businesses can breathe -

The new government has put forward a presidential campaign pledge to achieve a 3% potential growth rate and declared that it will pursue a pragmatic market-oriented government and regulatory reform. At a time when a prolonged low-growth trend continues, we strongly welcome its commitment to shifting toward a private sector-led growth structure. Above all, it is also encouraging that the title of “Senior Secretary for the Economy,” who serves as the president’s chief economic aide, has been changed to “Senior Secretary for Economic Growth.”

Its feasibility, however, depends on the government’s sincerity and ability to execute. Potential growth cannot be meaningfully raised through expanded fiscal spending or by stimulating domestic demand through local currency. As it is ultimately the combined result of labor, capital, and productivity, the key lies in the legal and institutional foundation that allows businesses to operate freely. Unless the framework of regulations and institutions changes, private-sector innovation and investment will remain constrained, and the “3%” target will be nothing more than an empty number.

Until now, our society has been unable to escape the assessment that it is “a country where it is difficult to do business.” Various regulatory legislation, restrictions on the Seoul metropolitan area, complex licensing and permitting procedures, and excessive tax and labor burdens have all obstructed the free activities of businesses. In addition, legal risks such as the Serious Accidents Punishment Act, the class action system, and the expansion of punitive damages have weakened incentives to invest. In such an institutional environment, when businesses cannot even breathe properly, how can the economy possibly grow?

In keeping with the rhetoric of “pragmatic market orientation,” we hope for concrete reform, not merely declaratory slogans. Regulatory reform should mean not a one-time overhaul but a comprehensive structural redesign, and above all, we hope businesses will be recognized not simply as objects of control but as the main agents and partners of economic growth.

The Center for Free Enterprise (CFE) hopes that the new government’s stated “growth-centered pragmatism” will not remain a campaign promise, but will instead be realized through the creation of an institutional environment conducive to doing business. Achieving a 3% potential growth rate is not a goal that can be accomplished through government-led stimulus measures. It is a figure that can be realized only within a structure in which private-sector autonomy and innovation are fully revived.

Professor Junkyung Ha, who was appointed Senior Secretary for Economic Growth, is a scholar who studied Joseph Schumpeter’s theory of growth, which emphasized entrepreneurial innovation. He has consistently stressed that it is businesses, not cash welfare, that create jobs, and has emphasized bold regulatory reform, investment, and entrepreneurship. We agree with much of the direction set by the new senior secretary, and we hope he will be able to put his long-held convictions into practice. In closing, we offer the following hope.

If you want growth, we hope you will first create the legal and institutional environment in which growth is possible. Just as deregulation of working hours must take priority above all else to strengthen global competitiveness and growth in the AI and semiconductor industries.

2025. 6. 12.

Center for Free Enterprise (CFE)

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Original title: [논평] 새정부 잠재성장률 3% 목표, 기대와 바람

Author: Center for Free Enterprise (CFE)

Date: 2025-06-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=comment&pn=2&idx=27794