The outlook for the president, Lee Myung-bak, and his ruling Grand National Party (GNP) remains mixed. Lee Myung-bak can take a certain amount of credit for South Korea's ongoing economic recovery. However, another downturn in the domestic economy would result in higher unemployment and would undermine his popularity. Some voters have also blamed Lee Myung-bak's hawkish stance towards North Korea for causing the sharply higher bilateral tensions evident since 2010. His five-year term as president ends in February 2013, and the next full election for the National Assembly (parliament) is due in April 2012. The GNP holds 171 seats out of 299 in the legislature. Although in theory this majority should provide the president with the means to pass legislation, in practice divisions within the GNP mean that he cannot take his party's full support for granted. Lee Myung-bak's challenge is to avoid becoming a lame duck as attention increasingly shifts to the race to succeed him.

The biggest potential impediment to policymaking will be the factional nature of the main political parties in South Korea. Factionalism within the GNP is set to persist, as Lee Myung-bak's main rival in the party, Park Geun-hye, opposes the government's policies on several fronts. This could destabilise the political scene, as Park Geun-hye might decide to form a new party based on the faction of around 60 GNP and other lawmakers that she controls in parliament, thereby depriving the ruling party of its majority in the National Assembly. Although such an outcome is not the Economist Intelligence Unit's central forecast, bad blood will linger. Park Geun-hye is unlikely to be appeased unless Lee Myung-bak endorses her as the GNP's next presidential candidate (South Korean presidents are allowed to serve only one five-year term). But it is more likely that Lee Myung-bak will seek to thwart her efforts to win the nomination. The issue is likely to come to the fore in 2011. Park Geun-hye is already paving the way for her bid to become the GNP's presidential nominee: in December she launched a think-tank, the National Future Institute, made up of experts in a variety of fields. Although the rivalry between Lee Myung-bak and Park Geun-hye will mean that divisions within the GNP persist, it is unlikely to cause the party to split, as all concerned realise that a divided conservative camp could hand electoral victory to the main opposition centre-left Democratic Party (DP).

South Korea's political scene is more stable than it sometimes appears. Despite a tradition of political brinkmanship, the basic democratic order is stable and commands universal support. In a culture in which steadfastness is a virtue and compromise is viewed as signifying weakness, further political confrontation is likely. This makes for a weak parliament, but it is not fatal to democracy. Many civic groups increasingly practise politics on the Internet, but tensions can still spill out into the streets. Confrontational public protests are led primarily by a small but vocal section of the population, including trade unions, whose fierceness is legendary but whose real influence will continue to decline.