The ‘three highs’ as the price of success

Kim Yong-beom, the presidential chief of staff for policy, recently described Korea's combination of high interest rates, high inflation and a weak currency — the so-called three highs — as "the cost of success" accompanying the country's economic advance into a new stage, rather than a sign of crisis. In a Facebook post titled "The Cost of Success," uploaded on Sunday, Kim argued that the current turbulence should be viewed as "friction from a leap forward" rather than evidence of economic instability. Earlier this month, he also drew attention by mentioning the possibility of a "national dividend" funded through excess tax revenue expected from the semiconductor boom. As Kim pointed out, Korea's economic conditions differ from those of past crises. Surging semiconductor exports have pushed the current account surplus to record levels. Corporate earnings have improved and foreign exchange reserves have grown substantially. Kim's explanation for the dollar-won exchange rate surpassing 1,500 won also carries some logic. He argued that the recent weakness of the Korean won stems less from a shortage of foreign currency than from demand for dollars by foreign investors cashing out gains from the rapidly rising Kospi. The problem, however, lies in what critics see as excessive optimism and selective interpretation. Kim emphasized that explosive growth in the semiconductor and AI industries has triggered a virtuous cycle in which corporate profits, wages and asset prices rise together, boosting household income, expanding tax revenue and naturally lowering the national debt ratio. Yet his remarks appear to treat high interest rates and inflation merely as temporary friction accompanying growth while overlooking concerns surrounding expansionary fiscal policies and excessive liquidity measures that contributed to rising prices and exchange-rate volatility. Structural weaknesses in the Korean economy also remain unresolved. Treating the three highs simply as the price of success risks encouraging complacency in crisis management. For Korea, which depends heavily on imported energy, a weaker won inevitably raises import costs and inflationary pressure. Household debt surpassed 1.99 quadrillion won ($1.3 trillion) in the first quarter based on an exchange rate of 1,530 won to the dollar. High borrowing costs are placing pressure on households, small businesses and self-employed workers while also threatening domestic consumption. There are also concerns that gains from the semiconductor boom will remain concentrated among major conglomerates and asset markets, deepening what is often described as Korea's "K-shaped polarization." Kim argued that confusion arises when people misread the "friction" of the three highs as signs of crisis. But if Korea truly is entering a new stage of economic development, the country must strengthen new growth engines while pursuing structural reform to secure sustainable growth. Without such efforts, critics argue, Kim's optimistic rhetoric risks sounding more like political reassurance than an economic diagnosis. This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.