Political Risk Analysis - Expected Liberal Victory Poses Downside Risks To Policy Continuity - JUNE 2017
BMI View: South Korea ' s presidential election on May 9 will likely see the election of a liberal president, ending ten years of conservative rule. The frontrunners are Moon Jae-in and Ahn Cheol-soo from the two liberal opposition parties, and they are in a tight race with Moon leading by a narrow margin. We expect the change in government to be negative for policy continuity and examine the various implications of both a liberal and conservative victory.
South Korea will be holding early presidential elections on May 9 following the upholding of conservative former president Park Geun-hye's impeachment ruling by the Constitutional Court on March 10. Given the amount of public anger towards Park and her fellow conservatives, we believe that voters will elect a liberal president, ending two consecutive five-year terms of conservative rule. There are four main candidates that stand out in the crowded presidential race, with the frontrunners being Moon Jae-in from the liberal Minjoo Party of Korea (Minjoo) and Ahn Cheol-soo from the liberal People's Party.
In this article, we examine the various implications that a victory by four of the leading candidates would have on both South Korea's domestic economy as well as the direction of its foreign policy. In consideration of the tight race between Moon and Ahn, we have not assigned specific probabilities to each candidate, but have instead ranked them by their relative likelihood of emerging victorious. We have also assessed the prospects of each candidate's presidency relative to the status quo in an attempt to gauge the outlook for policy continuity. Given the high likelihood of a liberal victory, we have downgraded our short-term political risk index to 70.0 from 73.5 previously, to reflect the risks to policy continuity.
|No Party Has The 50% Majority|
|South Korea - Breakdown Of Parliamentary Seats, Out Of 300|
|Source: BMI, The National Assembly|