SEOUL, South Korea — South Korea’s high financial suppose tank slashed its development forecast for the nation’s economic system for the second time in 4 months on Tuesday, expressing concern concerning the affect of U.S. President Donald Trump’s increasing tariffs.
The Korea Improvement Institute now tasks South Korea’s economic system to develop by 1.6% in 2025, which is 0.4 proportion factors decrease than its earlier estimate introduced in November.
Kim Jiyeon, a KDI economist, mentioned the “deterioration of the commerce surroundings” following Trump’s inauguration was a significant factor. South Korea can be grappling with political instability brought on by the impeachment and legal indictment of President Yoon Suk Yeol after he briefly imposed martial legislation in December.
Home demand stays weak attributable to slowing shopper spending and a declining job market, and the tempo of exports is slowing with most key industries other than semiconductors struggling to seek out momentum, mentioned Jung Kyuchul, who heads KDI’s macroeconomic evaluation division. KDI could possibly be additional decrease its development projections if Trump’s commerce actions intensify or South Korea’s political turmoil drags on, Jung mentioned.
“In November, we assumed that Trump’s steps to extend tariffs would proceed regularly over time and wouldn’t be carried out so shortly this yr, however there have already been tariff will increase concentrating on nations like China,” Jung mentioned in a briefing. “We anticipated that uncertainties could be regularly resolved after the Trump administration took workplace, however we are actually in a state of affairs the place uncertainties have truly grown.”
Trump this week introduced plans to impose 25% tariffs on all overseas metal and aluminum, following his resolution final month to impose 10% duties on all Chinese language imports, as he accelerates an aggressive push to reset international commerce.
Jung mentioned Trump’s metal and aluminum tariffs received’t doubtless have a serious affect on South Korea’s economic system, as these merchandise account for lower than 1% of its exports to america. Nevertheless, Trump says he’s additionally considering tariffs on automobiles, semiconductors and prescribed drugs.
“Since our semiconductor exports are substantial, the financial affect could be appreciable if that sector takes successful,” Jung mentioned.