At a meeting with his senior secretaries on Monday, Moon said a “peace economy” would allow Korea to “immediately catch up” with Japan’s size advantage.

He said: “We cannot let ourselves languish in pessimism or give up on peace economy because of fluctuations in inter-Korean and North Korea-US relations.

“Since there have been many years of confrontation and distrust, this will only become reality when we recover mutual trust through persistent efforts.

“When the two Koreas make concerted efforts with the confidence that peace economy will open up a unique future of opportunities for us, we will be able to achieve denuclearisation and ensuing peace on the Korean Peninsula and bring about common prosperity upon this foundation.”

The remarks came amid escalating tensions between Seoul and Tokyo, after Japan took South Korea off a list of preferential trading nations.

The Korean Supreme Court recently ruled that Japanese corporations should pay damages to Korean victims of forced labour during colonial rule.

Moon has said Japan taking South Korea off its ‘whitelist’ was a “blatant retaliation” against the ruling.

He said on Monday: “Japan will never succeed in impeding our economic drive.

“Rather, it will only serve to inspire us to fortify our resolve to become an economic powerhouse.”

Moon called on his senior secretaries to turn the situation into an opportunity, telling them that “wide-ranging economic policies to reinvigorate the economy across the board” should be considered during the drafting process for next year’s budget.