South Korea Forecasts Sluggish Growth in 2025, With US Tariffs Set to Upend Trade

South Korea projected sluggish growth in 2025 that would mark the slowest pace since the pandemic-induced contraction of 2020, as US tariffs are likely to upend commerce in the months ahead.

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The government projected the export-reliant economy will grow 0.9 per cent in 2025, a forecast that is slightly above the 0.8 per cent estimate issued by the Bank of Korea (BOK) in May.

Exports remained mostly resilient in the first half as South Korean manufacturers front-loaded shipments ahead of higher US tariffs, according to a joint government statement on Aug 22.

However, exports may weaken now that a trade deal with Washington was reached in late July, the statement said.

Statistics for the first 20 days of August showed exports to the US fell 2.7 per cent, indicating a loss of momentum after they rose 1.4 per cent in the full month of July.

The forecast underscores the fragile state of Asia's fourth-largest economy as it slowly recovers from one of its worst political crises, triggered by former president Yoon Suk Yeol's failed attempt to impose martial law.

As a key player in semiconductors, autos and advanced technologies, South Korea's growth will ripple across global supply chains, offering a leading indicator for global growth.