US President Donald Trump’s threatened 25 percent “reciprocal” tariffs on export-dependent South Korea have rattled Asia’s fourth-largest economy, sending Seoul-listed shares tumbling and pushing the currency to its weakest level since 2009.
The country has also seen months of political chaos, triggered by former president Yoon Suk Yeol’s December attempt to suspend civilian rule, which culminated in his impeachment and removal from office.
“Real gross domestic product (GDP) fell by 0.1 percent compared to the same period last year,” the central bank said in a press release, adding that it fell by 0.2 percent from the previous quarter.
“Two developments hit confidence and the economy – fallout from former President Yoon Suk Yeol’s failed martial law attempt and worries about shifts in US trade policies,” said Hyosung Kwon, an economist at Bloomberg Economics.
“Looking ahead, we see the economy rebounding in the second quarter of this year, helped by easing political uncertainty at home. But the recovery will likely remain fragile as elevated US tariffs weigh on external demand,” Kwon added.
The country’s economy expanded 1.3 percent in the first quarter of last year but grew less than expected in the fourth quarter, as the fallout from Yoon’s declaration of martial law hit consumer confidence and domestic demand.
According to the Korea Customs Service, as of mid-April, the country’s exports had dropped by more than 5 percent compared to the previous year, with declines reported in nine out of the country’s 10 major export categories excluding semiconductors.
The sharpest fall was in exports to the United States, which fell by more than 14 percent.
This week, the International Monetary Fund sharply revised down its growth forecast for South Korea this year, cutting it from 2 percent to 1 percent. (AFP)
