|
Analysis Why South Korea’s 2026 budget institutionalizes state riskGovernment offloads industrial policy debt onto state bank’s balance sheet, creating massive target for US trade hawks The National Assembly’s passage of the 2026 budget on Tuesday — the first on-time agreement since 2020 — marks the formal institutionalization of a high-risk state capitalism that leverages the sovereign balance sheet and disarms South Korea’s trade defenses. While the domestic press has framed the swift agreement as a rare moment of bipartisan cooperation, the reality is that the deal represents the latest manifestation of the South Korean government’s economic philosophy. The finalized $495.8 billion national budget effectively codifies ROK President Lee Jae Myung’s economic doctrine: aggressive state-led industrial policy funded by off-balance-sheet leverage and protected by a transactional © Korea Risk Group. All rights reserved. |





