Political Uncertainty in South Korea: Implications for Economic Confidence

According to Odaily, economists Jin Zhenxu and Cui Zhou from Citigroup have expressed concerns over the potential economic impact of the ongoing political uncertainty surrounding the impeachment case against South Korean President Yoon Suk-yeol. They suggest that this prolonged political instability could undermine overall economic confidence and reduce discretionary spending. The economists highlighted that if the South Korean legislature fails to pass the 2025 national budget by December, the likelihood of the Bank of Korea implementing consecutive interest rate cuts in January would increase. They further noted that the evolving political situation might lead to increased capital outflows, posing an upward risk to the USD/KRW exchange rate. This scenario underscores the potential economic ramifications of the political developments in South Korea, which could have broader implications for the country's financial stability and economic outlook.