Economic jitters following botched martial law decree will likely last through first half of year: BOK researcher
Published: 24 Jan. 2025, 16:45
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- SHIN HA-NEE
- [email protected]
![From left: Korean-German Chamber of Commerce and Industry (KGCCI) Vice President Felix Kalkowsky; Daimler Trucks Korea CEO Antonio Randazzo; Festo Korea General Manager Tomas Lekic; Merck Biopharma Korea General Manager Christoph Hamann; Germany Trade & Invest Director and Correspondent Korea Katharina Viklenko and Lee Ji-ho, head of Research Department at the Bank of Korea, during panel discussion of the KGCCI Economic Outlook 2025 event held in central Seoul on Jan. 24 [KGCCI]](https://koreajoongangdaily.joins.com/data/photo/2025/01/24/a8787d59-c7f9-45fd-b396-7009b993c4f4.jpg)
From left: Korean-German Chamber of Commerce and Industry (KGCCI) Vice President Felix Kalkowsky; Daimler Trucks Korea CEO Antonio Randazzo; Festo Korea General Manager Tomas Lekic; Merck Biopharma Korea General Manager Christoph Hamann; Germany Trade & Invest Director and Correspondent Korea Katharina Viklenko and Lee Ji-ho, head of Research Department at the Bank of Korea, during panel discussion of the KGCCI Economic Outlook 2025 event held in central Seoul on Jan. 24 [KGCCI]
The impact of ongoing political turmoil that has rattled the Korean economy will likely last through the first half of the year, said a research head at the Bank of Korea (BOK), who projected that the dampened consumer sentiment might recover to the pre-martial law level by the latter half.
“At this stage, we estimate that the political uncertainty triggered by the martial law situation will cut growth by about 0.2 percentage points,” said Lee Ji-ho, general director of the BOK's Research Department, in his presentation on the Korean economic outlook during the Korean-German Chamber of Commerce and Industry’s (KGCCI) Economic Outlook 2025 conference on Thursday.
“The political uncertainty level will stay at the present level until the first quarter of this year, and then gradually stabilize from the second quarters,” suggested Lee, adding, “consumer confidence will reach the previous level” by the second half of the year.
"Some people may think this is too optimistic, but at this stage, this is our baseline assumption,” said Lee.
The KGCCI Economic Outlook 2025 took place at Four Seasons Hotel Seoul in central Seoul, attended by 80 industry insiders, government officials and experts. Speakers and panelists included Germany Trade & Invest Director and Correspondent Korea Katharina Viklenko, Merck Biopharma Korea General Manager Christoph Hamann, Daimler Trucks Korea CEO Antonio Randazzo and Festo Korea General Manager Tomas Lekic.
The short-lived martial law and the subsequent political chaos was one of the recurring themes during the event, as its impact continues to take a toll on Korea’s consumer confidence.
The BOK recently lowered its growth forecast for this year from its previous projection of 1.9 percent to a range between 1.6 to 1.7 percent in a rare January report ahead of its official outlook adjustment slated for February, citing the worse-than-expected fallout of President Yoon Suk Yeol’s martial law declaration on the economy.
Deputy Ambassador of the German Embassy in Korea Joern Beissert noted that Korea showed strong democratic and systemic resilience in the prompt resolution of the marital law declaration but also pointed out that political uncertainty persists despite both parties expressing a willingness to address the situation.
“I believe that an increased willingness on the side of both parties to adopt a cross-party approach to address this constitutional challenge would be best for the sake of the country, its international standing and the economy,” said Beissert.
“Germany and other friends of Korea have an interest in a timely and peaceful solution in line with the constitutional order because we want Korea to be a strong partner both politically and economically.”
The deputy ambassador also condemned the recent storming of the Seoul Western District Court by violent protestors as “deplorable,” as it was the first occasion since the martial law decree that protestors resorted to violence, adding that the event indicated a “danger of escalation.”
“The Korean government will continue to introduce support measures for foreign companies,” said KGCCI Chairperson Park Hyun-nam, who is also the managing director of Deutsche Bank’s Seoul branch, in her welcome remarks.
While noting that the government has been sending messages to assure that the economic system is operating independently from the political situation, Park also suggested that if the current situation persists, "the ongoing political uncertainty will continue to pressure our economy."
BY SHIN HA-NEE [[email protected]]
with the Korea JoongAng Daily
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