Why is South Korea Experiencing the Lowest Q1 Economic Growth Among Major Economies?
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Synopsis
South Korea's economic growth has hit rock bottom among major economies in the first quarter of the year, raising concerns amid a political crisis and international tariff uncertainties. This article delves into the factors behind this decline and compares it with other nations' performances.
Key Takeaways
- South Korea recorded a 0.246 percent contraction in GDP.
- Political turmoil and US tariffs significantly impacted growth.
- Ireland and China led with high growth rates.
- The BOK revised growth forecasts downwards.
- Unusual factors like delayed semiconductor demand also hindered growth.
Seoul, May 11 (NationPress) South Korea has recorded the lowest economic growth among 19 prominent economies in the first quarter, as revealed by data released on Sunday. This downturn is occurring amid a domestic political crisis and uncertainties stemming from the sweeping tariff policies of US President Donald Trump.
The nation's real gross domestic product (GDP), a crucial indicator of economic performance, contracted by 0.246 percent in the January-March timeframe compared to the previous quarter, according to the Bank of Korea (BOK).
South Korea's performance was the weakest among the 19 major economies that have published their first-quarter growth data, which includes the United States, Canada, France, Germany, and China, as reported by Yonhap news agency.
Ireland led with the highest growth rate at 3.219 percent, followed by China at 1.2 percent and Indonesia with 1.124 percent.
Spain, with a GDP similar to South Korea's, achieved a growth rate of 0.568 percent. Canada experienced a 0.4 percent expansion in the first quarter, while Italy and Germany recorded growth rates of 0.4 percent and 0.26 percent, respectively. France also saw a positive growth rate of 0.127 percent.
The US economy faced a contraction of 0.069 percent, and Hungary's economy declined by 0.152 percent.
Although Japan and Britain have yet to announce their first-quarter figures, a Bloomberg survey predicts that Japan's economy may contract by 0.1 percent, while Britain's is expected to grow by 0.6 percent.
The unexpected negative growth in South Korea has been partially attributed to political upheaval following former President Yoon Suk Yeol's controversial imposition of martial law on December 3, which disrupted the economy and reduced consumer spending. Yoon was removed from office on April 4.
The sweeping tariff policies from the US have further burdened the trade-reliant South Korean economy. Trump previously announced “reciprocal” tariffs that included a 25 percent tariff on South Korea, though he later decided to delay its implementation for 90 days.
In addition to the proposed reciprocal tariffs, existing tariffs on autos and steel continue to apply.
The BOK had earlier forecasted a 1.5 percent growth outlook for South Korea's economy in 2025, but Governor Rhee Chang-yong later indicated that this forecast may have been “too optimistic.”
The central bank also pointed out several “unusual factors” that hindered growth, such as delayed demand for high-performance semiconductors, project suspensions at some construction sites, and large-scale wildfires.
Asia's fourth-largest economy expanded by 1.3 percent in the first quarter of 2024 but slipped into a contraction in the second quarter with a 0.2 percent decline, followed by minimal growth of 0.1 percent in both the third and fourth quarters.
Point of View
It is crucial to recognize that South Korea's economic struggles are intertwined with both domestic political challenges and global economic shifts. The country must navigate these turbulent waters with resilience, focusing on sustainable growth paths that can stabilize the economy and regain consumer confidence.
NationPress
29/06/2025
Frequently Asked Questions
What is the current economic growth rate of South Korea?
South Korea's economy contracted by 0.246 percent in the first quarter, making it the lowest among major economies.
What factors contributed to South Korea's economic decline?
The decline is attributed to domestic political instability and uncertainties surrounding US tariff policies.
How does South Korea's growth compare to other major economies?
Among 19 major economies, South Korea posted the weakest growth, with other countries like Ireland and China showing significant increases.
What is the prediction for South Korea's economic growth in the future?
The Bank of Korea had forecasted a 1.5 percent growth outlook for 2025, but this may have been overly optimistic.
How have tariff policies affected South Korea's economy?
US tariffs, including a proposed 25 percent tariff on South Korea, have negatively impacted the trade-reliant economy.
