Overview

• The Bank of Korea reported a 0.2% contraction in Q1 2025 GDP, marking the first quarterly decline since Q2 2024.
• Exports fell 1.1%, private consumption dipped 0.1%, and construction investment plunged 3.2%, contributing to the downturn.
• Political instability following former President Yoon Suk Yeol's removal and U.S. tariff threats weighed heavily on economic confidence.
• The International Monetary Fund has halved South Korea's 2025 growth forecast to 1.0%, citing trade and domestic challenges.
• Policymakers are expected to respond with rate cuts and fiscal measures, as a June 3 presidential election looms.