South Korea’s high suppose tank lowers financial progress projection, citing Trump’s tariffs

SEOUL, South Korea (AP) — South Korea’s high financial suppose tank slashed its progress forecast for the nation’s economic system for the second time in 4 months on Tuesday, expressing concern in regards to the affect of U.S. President Donald Trump’s increasing tariffs.

The Korea Growth Institute now initiatives South Korea’s economic system to develop by 1.6% in 2025, which is 0.4 proportion factors decrease than its earlier estimate introduced in November.

Kim Jiyeon, a KDI economist, stated the “deterioration of the commerce setting” following Trump’s inauguration was a significant component. South Korea can also be grappling with political instability brought on by the impeachment and prison indictment of President Yoon Suk Yeol after he briefly imposed martial legislation in December.

Home demand stays weak because of slowing client spending and a declining job market, and the tempo of exports is slowing with most key industries apart from semiconductors struggling to search out momentum, stated Jung Kyuchul, who heads KDI’s macroeconomic evaluation division. KDI may very well be additional decrease its progress projections if Trump’s commerce actions intensify or South Korea’s political turmoil drags on, Jung stated.

“In November, we assumed that Trump’s steps to extend tariffs would proceed progressively over time and wouldn’t be carried out so rapidly this yr, however there have already been tariff will increase focusing on nations like China,” Jung stated in a briefing. “We anticipated that uncertainties can be progressively resolved after the Trump administration took workplace, however we at the moment are in a state of affairs the place uncertainties have really grown.”

Trump this week introduced plans to impose 25% tariffs on all overseas metal and aluminum, following his determination final month to impose 10% duties on all Chinese language imports, as he accelerates an aggressive push to reset international commerce.

Jung stated Trump’s metal and aluminum tariffs gained’t seemingly have a serious affect on South Korea’s economic system, as these merchandise account for lower than 1% of its exports to the USA. Nonetheless, Trump says he’s additionally considering tariffs on automobiles, semiconductors and prescription drugs.

“Since our semiconductor exports are substantial, the financial affect can be appreciable if that sector takes a success,” Jung stated.