Abacus | Korea’s political scandal threatens a descent into Japanese-style stagnation

It’s been a rough few months for South Korea. First the country’s leading shipping line went bust. Next the new flagship product from its biggest corporation turned to be an expensive and dangerous dud. Then President Park Geun-hye got embroiled in a political scandal so severe that her unseemly departure from the head of state’s Blue House now looks to be only a matter of time.

Watch: Park says she’ll resign after lawmakers act

South Korean ruling party urges Park to quit in April or face impeachment

Exactly how much time could prove crucial. As long as Park remains in office, Korea will remain locked in a state of policy paralysis. And until a successor with a solid political mandate is installed in her stead, Seoul will have no opportunity to tackle a suite of deepening economic problems which, if left unaddressed, threaten to see Korea follow the same path into deflationary stagnation that Japan trod more than 20 years ago.

The signs are not encouraging. Last week Park did offer to resign, but only once parliament had agreed a plan for “the stable transfer of power”. Her offer was promptly rejected by opposition politicians, who saw it, with considerable justification, as a desperate attempt to delay her departure. Instead they are intent on impeaching the president following revelations that she has long been in thrall to her friend and confidante Choi Soon-sil, a private citizen who not only appears to have had an undue influence over Park’s policymaking, but who also shamelessly exploited her connections to the president to extort vast sums of money from some of Korea’s leading companies.

The trouble is that impeachment will take time, possibly as much as six months between an initial parliamentary vote and the final verdict from Korea’s constitutional court. Worse, Park’s successor will inherit an office damaged by the long and divisive impeachment process, and will inevitably have to devote the main part of his or her energies to healing political wounds and restoring the authority of the presidency. That means the new president will not be able to focus on pushing through the economic reforms that Korea so badly needs.