South Korea's President Lee Myung-Bak said Saturday that taming inflation and creating jobs would be two of his priorities next year, along with protecting the country.
Lee said in a New Year message the situation on the Korean peninsula would be fluid next year. He made no direct reference to North Korea's change of leadership from Kim Jong-Il, who died on December 17, to his son Jong-Un.
Pyongyang's new regime Friday threatened retaliation against Seoul for its perceived slights during mourning for Kim Jong-Il, and vowed never to deal with Lee and fellow "traitors".
Lee said his government, which has less than 14 months still in office, would make "utmost efforts to defend the country under any circumstances and to create jobs and tame inflation".
He promised to devote "every ounce of my energy to make people feel at ease in their livelihoods".
Cross-border relations have been icy since Seoul accused Pyongyang of sinking a warship in March 2010 with the loss of 46 lives. The North shelled a border island in November 2010, killing four South Koreans.
Lee is due to make a televised new year address Monday, which is expected to focus largely on North Korea.