The Bank of Korea (BOK) has adjusted its 2025 growth forecast downward to 1.6 to 1.7% on Monday, citing lingering domestic political instability and heightened external risks. This marks a significant reduction from its earlier projection of 1.9%. The central bank highlighted weaker consumer sentiment and sluggish investment as key contributors to the revised outlook. South Korea’s Economic Sentiment Index plunged to 83.1 in Dec. 2024, its lowest since the pandemic.

Despite strong exports in sectors like semiconductors and IT products, broader consumption and investment trends have struggled to recover. The BOK anticipates additional headwinds from the Trump administration’s protectionist policies, which could disrupt South Korea’s trade-dependent economy. The central bank emphasized the need for swift government action and further clarity in economic policymaking to stabilize conditions.