Investment Rating - The report indicates a potential growth estimate for Korea below 2.0% from 2026 onwards, highlighting the urgency for structural reforms [5][26]. Core Insights - Korea is facing significant demographic challenges, with a fertility rate that fell to 0.75 in 2024, the lowest in the world, and a projected halving of the workforce by 2065 [7][9]. - The new government's commitment to structural reform is emphasized, with a focus on long-term solutions rather than short-term fixes [7][26]. - The pension reform legislated for the first time in 18 years aims to improve the financial sustainability of the pension fund in response to a rapidly aging population [26][32]. Summary by Sections Demographic Trends - Korea's total population began to decline in 2025 due to the fastest dropping fertility rate globally [9]. - The fertility rate has shown a slight rebound in 2024, providing a window of opportunity to support critical age groups [15][16]. Economic Reforms - The new government under President JM Lee is prioritizing economic recovery and addressing low birth rates as key agenda items [59]. - Labor market reforms are necessary to address dualism, gender wage gaps, and strict working hour regulations [71]. Pension and Consumption - The income replacement ratio is forecasted to fall to 40% by 2028, which is below the OECD recommended level [32][34]. - As aging accelerates, the number of pension recipients is expected to outpace contributors by 2047, impacting household consumption [44][45]. Capital Market Reforms - The government plans to mitigate the "Korea discount" through capital market and governance reforms, including changes to corporate transactional rules [72][74]. - The Commercial Code amendment bill is on a fast track for approval, aiming to enhance corporate governance and shareholder returns [78][79].