A senior Bank of Korea official says the recent political turmoil in South Korea is a downside risk to the economy, but expects the effects to subside within six months. The bigger concern is the potential for U.S. import tariffs proposed by President-elect Donald Trump, which could hurt South Korea's export-driven economy.
Recent political turmoil in South Korea is seen as a downside risk to the country's economy, but its effects are likely to subside within half a year, said BOK official Soohyung Lee. The most concerning headwind for South Korea’s economy in 2025 is if U.S. President-elect Donald Trump’s proposed import tariffs come to fruition. Based on the country's robust economy over the past 20 years, Lee is 'cautiously optimistic' about economic conditions.
Risks posed by South Korea's political turmoil to its economy could subside within half a year, but external pressures owed to possible tariffs on the country's exports to the U.S. are 'troublesome,' a key Bank of Korea official said. 'We had two presidential impeachments before, and for both cases, the political turmoil or uncertainties have subsided within three to six months,' Soohyung Lee, Monetary Policy Board member at the Bank of Korea said Thursday on CNBC's 'It's possible that the political turmoil may not take as much of a toll on the country's economy, but the downside risks posed by external factors are more worrisome, Lee said. The potential tariffs proposed by U.S. President-elect Donald Trump 'puts a lot of pressure, or perceived pressure, for export-driven countries, including South Korea,' Lee said. Not only would tariffs hit South Korea's exports, they might also reintroduce inflationary forces in the U.S. economy, which could keep U.S. interest rates high and the dollar strong, in turn impacting the Korean won. With the Chinese yuan potentially depreciating as well, those factors could weaken the South Korean won even further, Lee acknowledged, which might increase volatility in the country's financial markets. The won was last trading at 1,466.48 against the U.S. dollar, near 15-year lows it hit in December 2024
SOUTH KOREA ECONOMY POLITICAL TURMOIL TRADE TARIFFS IMPORT EXPORTS WON
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