SEOUL, January 21 (AJP) - South Korea’s central bank has revised its 2025 economic growth forecast downward to a range of 1.6 to 1.7 percent from an earlier estimate of 1.9 percent.
The Bank of Korea (BOK) attributed the adjustment to heightened political uncertainty and a slump in consumer confidence following December’s martial law declaration and the deadly Jeju Air incident.
In a statement released Monday, the BOK indicated that growth in the fourth quarter of 2024 likely fell short of its November projections. Consumer spending and construction investment weakened significantly in the wake of the Dec. 3 martial law declaration and the deadly Dec. 29 aircraft crash.
Key economic indicators reflected the downturn. Growth in credit card spending slowed sharply at the end of December, and sales of imported cars continued their decline.
Meanwhile, the consumer sentiment index dropped below the long-term average of 100 in early January, down from nearly 120 in early December before the political upheaval.
The construction sector also showed signs of strain. Apartment sales fell to 21,000 units in December, 17.2 percent below the targeted 25,000 units, highlighting a slowdown in real estate investment.
Looking ahead, the central bank plans to release a revised growth forecast in February, taking into account three critical factors: the resolution of political instability, the potential introduction of additional government stimulus, and the economic policies of the new U.S. administration under President Donald Trump.
“It is essential to prevent political uncertainty from escalating again and to ensure that economic policies operate consistently, independent of political fluctuations,” a BOK official said. “This is vital to securing trust in our economy and stabilizing domestic sentiment.”
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