South Korea Faces Economic Setback Amid U.S. Tariff Tensions

South Korea's economy contracted unexpectedly in the first quarter due to stagnant exports and consumption, partly due to aggressive U.S. tariffs. The GDP shrank by 0.2%, raising calls for further interest rate cuts to mitigate the impact. Analysts predict more financial easing amid global recession fears.

In a surprising turn, South Korea's economy contracted in the first quarter, spurred by halted exports and consumption amid fears surrounding Washington's persistent tariffs. The national Gross Domestic Product dipped by 0.2%, defying predictions of a slight increase according to a recent Reuters survey.

This downturn has amplified demands for the Bank of Korea to implement further interest rate cuts amid concerns that the tariff policies of former U.S. President Donald Trump could steer South Korea's trade-centric economy towards a decline. "Industrial output suffered and exports began dragging growth amid global uncertainties," noted analyst Huh Jae-hywan.

While South Korea aims to negotiate tariff reductions in Washington, preliminary April data revealed a 5.2% drop in exports, showcasing the economic risks tied to Trump's protectionism. South Korea's economy faces significant challenges as it navigates these external pressures.

(With inputs from agencies.)