S. Korea cuts 2025 growth forecast after martial law fiasco

South Korea cut its economic growth forecast for 2025, reflecting the fallout from impeached President Yoon Suk Yeol's martial law debacle and risks for the trade-reliant nation from Donald Trump's tariff plans.

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The Finance Ministry now sees the economy growing 1.8 per cent in 2025 after expanding 2.1 per cent in 2024, it said in a statement on Jan 2. Those projections are down from July's forecasts of 2.2 per cent and 2.6 per cent, respectively, and underscore the pressure from weaker private consumption and easing export momentum.

Global uncertainties are a key risk for South Korea, as demand for memory chips may face a correction and competition among export-reliant economies is intensifying, the ministry said. It also pointed to ongoing concerns about capital outflows to the US and the country's political situation.

"In 2025, there is a possibility that economic growth, financial markets and people's livelihoods will be significantly affected by external and internal uncertainty that is higher than ever before," the ministry said.