The economy was estimated to have grown 2.1% last year, compared to its earlier projection of 2.2%, the ministry said.“Downside risks to the economy increased as uncertainties surrounding at home and abroad the economy grew,” the ministry said in its 2025 Economic Policy Directions report.“The government will seek additional economic reinforcement measures if necessary after reviewing overall economic conditions in the first quarter.”South Korea's opposition-controlled National Assembly last month passed a government budget bill for 2025, slashed from the government's proposal amid resistance from the ruling People Power Party.
Yoon, who faces an unprecedented arrest over the short-lived martial law, reiterated that he would “fight until the end.”The ministry is likely to cut its growth forecast further if the political turbulence lasts longer.“The (latest) forecasts were made based on assumptions that uncertainties from the martial law and impeachment are managed to some extent,” the First Vice Minister of Economy and Finance Kim Beomseok said at a briefing.
The central bank, which expected the economy to grow 1.9% this year before the martial law, was predicted to cut interest rates to prop up the economy, analysts said.“A sizable supplementary fiscal budget is expected to be announced to revive markedly diminished domestic growth, and monetary policy is expected to follow suit with faster rate cuts than we had expected,” ING said in a note.
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