South Korea's Economic Slowdown Amid Political Turmoil: An Analysis

South Korea's economy barely grew in Q4 2024 due to domestic demand issues and political turmoil. GDP rose by 0.1%, missing expectations amid political chaos. Consumer spending and investment weakened, while exports improved. Calls for fiscal measures are intensifying as growth projections remain bleak.

South Korea's economy showed minimal growth in the final quarter of 2024, falling short of market predictions, amid a significant political crisis that impacted domestic demand. According to central bank estimates, the GDP increased by a modest 0.1% from the previous quarter.

The economic landscape was further affected in December by dampened consumer and business sentiment following the impeachment of President Yoon Suk Yeol and Prime Minister Han Duck-soo. While exports rose slightly due to strong semiconductor demand, other indicators such as consumer spending and investment reflected weakened performance.

Amidst ongoing political instability, the Bank of Korea is expected to ease monetary policy in a bid to support the struggling economy. Economists and opposition politicians are urging for a supplementary budget, with the GDP growth for 2024 standing at 2.0%, and a projected slowdown in 2025.