Trump's tariff threat looms over South Korea's economy

The tariffs announced by US President-elect Donald Trump pose a greater threat to South Korea's economy than the recent political turmoil related to the removal of President Park Geun-hye from office, says Ri Chang Yong, president of the central bank in Seoul.

In an interview with the "Financial Times," Ri emphasised that external factors, such as the growing protectionism in international trade, currently raise more concern than the country's internal problems. He said that the announcement of tariffs is the main reason why Koreans have lowered our economic forecasts for the current year and the next.

Ri noted that the South Korean economy, heavily reliant on exports, may suffer more due to potential trade barriers imposed by the US than due to the domestic political crisis. He added that the external factors are currently introducing more uncertainty than internal ones.

At the same time, the central bank president admitted that the political deadlock might delay the implementation of key structural reforms. He recalled, however, that South Korea's economy has already survived similar challenges in 2004 and 2016, when it also faced crises at the highest levels of power.

After President Park Geun-hye was removed from office as a result of a corruption scandal, the country faced political uncertainty. Despite this, as reported by the FSC, state institutions, including the central bank, continue to work, focusing on minimising the impact of external threats on the economy.