South Korea Cuts GDP Forecast Following Martial Law Crisis
South Korea’s economy faces challenges as growth forecasts are slashed due to political turmoil and global trade uncertainties
South Korea, Yoon Suk Yeol, GDP, Martial Law, Economy, Trade
Seoul: South Korea is in a bit of a pickle right now. The government just announced a big cut to its economic growth forecast for this year. This comes after the whole mess with President Yoon Suk Yeol’s martial law declaration, which really shook things up.
They’re now expecting the economy to grow by just 1.8% in 2025, down from earlier predictions. Last year, it was 2.1%, and they thought it would be better this year. But with private spending slowing down and exports not looking great, things are looking a bit grim.
There are a lot of global uncertainties too. Demand for memory chips is shaky, and competition is heating up among countries that rely on exports. Plus, there’s worry about money flowing out to the US and the political situation here.
Yoon’s quick move to declare martial law back in December really threw the country into chaos. It led to his impeachment and has made investors pretty nervous. The Constitutional Court is still deciding what happens next.
The government’s new outlook is even lower than what the Bank of Korea predicted last November. They might have to cut their growth forecast again soon. There’s talk that the central bank could lower interest rates again in January, which would be the third cut in a row.
Bank of Korea’s Governor Rhee Chang-yong mentioned that more rate cuts could cause some worries, and they’re keeping a close eye on the situation. Some analysts are even saying that GDP might shrink at the start of 2025 if exports, especially in semiconductors, keep slowing down.
So, yeah, it’s a tough time for South Korea, and it doesn’t seem like things are going to get better anytime soon.