South Korea's Moon Jae-in has staked his presidency on tackling two big challenges: North Korea and the economy. Both are proving to be stubborn foes.

The country's gross domestic product contracted 0.3 percent in the first quarter — the biggest decline in a decade — the Bank of Korea said Thursday. The blow came just two days before the president was expected to mark the first anniversary of his historic summit with North Korean leader Kim Jong Un — with an event snubbed by the North Koreans.

"Not only the data today but also latest data showed that the economy is performing worse than expected. It won't get any easier," said Park Sangin, a professor at Seoul National University's Graduate School of Public Administration. "It is a very burdensome situation for the Moon Jae-in administration."