The BGA Korea Team, led by Managing Director B.J. Kim, wrote an update to clients on Korea’s 2025 political-economic outlook.

Context

  • Korea is currently headed by acting President Choi Sang-mok, deputy prime minister for the economy, following President Yoon Suk-yeol’s foiled martial law declaration and his subsequent suspension from office. As Yoon awaits the Constitutional Court’s ruling on his impeachment, views are divided on two key issues: the political question of whether the court should end his government and allow the new presidential election to be held as soon as possible and the economic question of what the recent turmoil means for Korea’s economy in 2025 and beyond.
  • Choi assumed his post after the National Assembly impeached Prime Minister Han Duck-soo on December 27 for refusing the opposition Democratic Party’s (DP) demand to fill the Constitutional Court’s vacancies. Han, who served as the acting president for just two weeks, would not act without a bipartisan agreement. After assuming office, Choi appointed two judges on December 31 to fill the court vacancies, making Yoon’s impeachment likely. The Constitutional Court is expected to decide on the impeachment by mid-April, when two of the sitting judges will retire.

Significance

  • The latest opinion polls show 60-70 percent of Koreans believe the Constitutional Court should uphold the National Assembly’s December 14 vote to impeach Yoon, which would end his administration two years early. Yoon and the PPP are relying on the 25-37 percent of Koreans who oppose the impeachment. They are trying to return Yoon to office and, if that fails, prevent DP leader Lee Jae-myung from becoming the next president.
  • Acting President Choi is focused on keeping the economy on track. Those concerned about politics derailing the economy are closely watching Korea’s sluggish domestic demand. They worry that political turmoil, combined with several days of national mourning for the December 29 Muan airport plane crash, could lead to decreased domestic consumption. Although some early indicators validate such concerns, more time is needed to determine the extent to which these issues will impact Korea’s economy.

Implications

  • Many observers are closely watching the Korean won, whose value dropped from KRW 1,405 to the dollar before the martial law announcement to KRW 1,470 on New Year’s Day. During the same period, Korea’s main stock index, KOSPI, fell from 2,500 to 2,400. Many media outlets see the currency and stock depreciation as combined indicators of the international market’s uneasiness about Korea’s economic future.
  • Other analysts have noted that the recent currency depreciation could strengthen Korea’s export drive. The world’s fifth-largest exporter, Korea broke its own all-time annual export record again in 2024. Others are worried that the cheap currency will allow foreign investors to “bargain shop” Korea’s real estate and corporate ownership. Some international equity market analysts are calling Korea “attractive for undervalued shares.”

We will continue to keep you updated on developments in Korea as they occur. If you have any comments or questions, please contact BGA Korea Managing Director B.J. Kim at bjkim@bowergroupasia.com.

Best regards,

BGA Korea Team

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Managing Director

B.J. supports BGA clients on the ground in Korea, advising them on stakeholder engagement and larger government affairs and public policy matters in Seoul. A former Korean diplomat, B.J. has advised international firms on political-economic and policy-regulatory affairs since 2003, offering monitoring and analytical services on legislative, regulatory and political issues. He also has offered companies hands-on support in their engagement in Korea. Prior to his career in consulting, B.J. was a diplomat serving two of Korea’s trade ministers as policy counselor and special assistant, developing international economic policies and public communications strategies on export and investment promotion. He has ... Read More