[News Today] GOVT LOWERS 2025 GROWTH OUTLOOK

[LEAD]
Amid domestic slumps, export declines, and political turmoil, the outlook for South Korea's economy remains grim. Institutions worldwide have already lowered their growth projections. The government acknowledged that next year’s growth will hover around the low 1% range.

[REPORT]
Deputy Prime Minister Choi Sang-mok held a first news conference since the failed martial law declaration.

He insinuated at the high possibility of slashing next-year's growth outlook for the Korean economy.

Choi Sang-mok / Deputy Prime Minister for Economy
Downgrading the 2025 economic outlook is inevitable. It's highly likely to fall short of the potential growth rate.

Choi said the nation's economy will likely fall short of its potential growth rate of 2%, indicating a crisis.

Previously, the Korean government predicted the nation's economy would expand 2.2% in 2025.

Even prior to the fallout from martial law declaration, domestic and overseas think tanks were already lowering Korea's economic growth outlook.

They cited a slowdown in export growth and protective trade measures of the incoming Trump administration. To make matters worse, consumption has been shrinking following the president's short-lived decree.

The deputy prime minister expressed his concern about growing uncertainties rather than growth rate figures.

A report announced last month by the Bank of Korea also contains noteworthy points.

The central bank cut the nation's ecnomic growth rate for 2025 to 1.9%.

It believes the U.S. will likely impose 10-20% universal baseline tariffs on all imports in the first quarter of 2026.

Donald Trump has vowed to enact his tariff policies within first 100 days after his inauguration next month. If his
policies are implemented earlier than expected, the 1.9% growth outlook for Korea will be a very likely scenario.

The impacts of the martial law fiasco and the presidential impeachment have not been reflected either.

Joo Won / Hyundai Economic Research Inst.
Political uncertainty is hard to predict. If consumption, investment are undermined by the prolonged impeachment process, the growth rate may go down.

With the passage of the reduced budget, the government's capacity to respond to economic challenges has also taken a hit, emerging as another reason to downgrade the economic outlook.