SEOUL -- South Korea's economy could be the latest casualty of the influence-peddling scandal surrounding President Park Geun-hye, with the political spectacle holding back critical economic and industrial reforms.

People who joined the public protests may have been partly motivated by their frustration toward economic policy, acknowledged Yoo Il-ho, strategy and finance minister, at a news conference for foreign media on Dec. 11. Yoo, who doubles as deputy prime minister, made the comment as he was confronted with a charge that economic policy during the nearly four years of Park's rule was a failure. Huge public demonstrations against the president had been a major catalyst behind her impeachment at the National Assembly two days earlier.

Park debuted a three-year plan for economic reform targeting 4% growth in February 2014, in the second year of her term. But that has not panned out. Growth slipped to 2.6% in 2015 from 3.3% the year earlier, and looks to come in around the 2% range again this year.

The Korea Development Bank sees capital investment edging up just 0.1% in 2017 to 179.7 trillion won ($149 billion). Investment by small and midsize businesses is projected to plunge 13.2% to 25 trillion won -- a sign that risk avoidance is ascendant.

South Korea's working-age population is also seen shrinking from here on out, having peaked in 2016. The country's fertility rate is a slim 1.24 -- less than Japan's -- spelling a decline in domestic demand unless something is done. Meanwhile, the shipbuilding, shipping, steel, construction and chemicals sectors -- traditional drivers of South Korea's economy -- have been singled out by the government as structurally unsound and in need of broad reform and realignment.

No one to follow

But an economic overhaul requires political leadership -- something in short supply as strife between the ruling Saenuri Party and opposition lawmakers deepens.

A spokesperson for the leading opposition Democratic Party of Korea urged Prime Minister Hwang Kyo-ahn, acting president during Park's impeachment, to cooperate more actively with the National Assembly. Opposition lawmakers have called attempts to stimulate the economy by easing real-estate financing regulations a handout to the wealthy, demanding that the the government rethink the measure. Labor reforms that would make it easier to sack workers are also drawing fire.

Meanwhile, a special prosecutor looking into allegations that Choi Soon-sil, a close confidante of Park's who holds no position in government, was given access to state affairs has barred a number of South Korean business leaders from leaving the country, pending investigation. This group includes Lee Jae-yong, vice-chairman of Samsung Electronics; Lotte Group Chairman Shin Dong-bin; and Chairman Chey Tae-won of SK Group. These and other major conglomerates, known as chaebol, are alleged to have donated to two nonprofit foundations linked to Choi to curry favor with the president.

This scandal has lent strength to criticism of cozy ties between government and industry, as well as calls for improved governance at the chaebol. Samsung's Lee told lawmakers during a hearing Dec. 6 that his company would rethink monetary contributions to the Federation of Korean Industries, a powerful business lobby that has been called a breeding ground for such collusion.

"Business at the chaebol will need to change significantly over the next few years," a Lotte Group executive said.

South Korea's issues are not with the financial system, as in the wake of the Asian currency crisis, but with the real economy, said Kim Sang-jo, a professor at Hansung University. The problem is that nothing can be done, despite an urgent need for reform, he said.

As key industries flail, a leadership vacuum deepens and demographic change weighs on the economy, South Korea is looking more and more like Japan over the past 20 years. The country will need to take swift action if it is to avoid its own "lost decades."