Economic Uncertainty Looms as South Korea Faces Tariff Challenges

South Korea's economic growth forecast for 2025 has been reduced by the Korea Development Institute (KDI) to 1.6% due to concerns over US tariffs and domestic political instability. The KDI warns that further tariff measures could exacerbate the slowdown, particularly impacting exports in semiconductor, car, and pharmaceutical sectors.

South Korea's key economic forecaster, the Korea Development Institute (KDI), has once again cut its growth expectations for the nation's economy, exacerbating concerns over U.S. tariffs and domestic volatility.

KDI now projects a 1.6% growth in 2025, a 0.4 percentage point drop from its last forecast. Economists at KDI cite increased tariffs from the U.S. under President Donald Trump and ongoing domestic political tensions as primary factors behind the slowdown.

Domestic demand is waning, and exports are struggling, except in semiconductors. While recent tariffs on steel and aluminum may not significantly affect South Korea, potential tariffs on autos, semiconductors, and pharmaceuticals pose a threat.