Korean economy unshaken by political turmoil, trade minister says

Minister for Trade Cheong In-kyo gives a briefing at the Ministry of Trade, Industry and Energy’s office in Sejong, Tuesday, about the country's exports and foreign investments made in 2024 and economic outlook for 2025. Courtesy of Ministry of Trade, Industry and Energy

By Ko Dong-hwan

• Published Jan 7, 2025 4:45 PM KST
• Updated Jan 7, 2025 5:12 PM KST

Minister for Trade Cheong In-kyo, Tuesday, dismissed concerns that Korea's economy will suffer this year due to political turmoil surrounding the embattled President Yoon Suk Yeol and the deeply divided legislature.

Cheong noted at a media briefing in Sejong that key economic indicators, such as the currency exchange rate, remain stable and are expected to improve. He cited record-breaking exports and foreign direct investment as the foundation for his optimistic outlook for 2025.

The minister said that there was no evidence suggesting the national economy was being adversely affected by the unprecedented political crisis. On the contrary, he said that the situation could demonstrate the resilience of Korea’s economy by showcasing its ability to recover despite significant challenges.

“It is a top priority of acting President Choi Sang-mok to prevent the political turmoil from affecting the economy. It was so as well under Prime Minister Han Duck-soo,” Cheong said. “I have also interviewed investors and company representatives while receiving reports on a regular basis. So far, there has not been any visible sign of such concerns.”

Cheong said that the Korean currency’s depreciation against the U.S. dollar has increased the won-dollar exchange rate to a worrisome level of above 1,450 won. However, he downplayed the severity of the situation.

“The rate has actually gone down a little compared to last week when the political turmoil was more heated,” he said. “Of course, a high exchange rate will raise prices of imported goods and might hamper stable supplies. But 1,450 won is not an insurmountable level. I expect the rate to go down to below 1,400 won as in last November, and would normalize before long.”

The minister’s economic outlook for this year is based on what he describes as three particular strengths of Korea compared to other countries: a robust manufacturing infrastructure, a broad global free trade agreement network and a stable supply chain.

“These strengths will once again help the country secure more foreign investments than we would anticipate this year,” he said.

Cheong’s economic forecast came after the country registered record-high volumes of exports and foreign direct investments in 2024. Korea exported $684 billion overall, achieving a trade surplus of $51.8 billion. As per export volume from January to September 2024, Korea ranked sixth in the world.

Semiconductors led national exports with $142 billion, a record-high amount. Information technology (IT) categories, automobiles, large-scale container ships, liquefied natural gas tankers and petrochemical products were other key exports.

China was the country's largest export market in 2024, importing $133 billion worth of goods, a 6.9 percent year-on-year increase. Exports to the United States saw a record-high volume for the seventh year in a row, while exports to Southeast Asian countries saw year-on-year increases in volume across IT and petrochemical products.

“It is my careful prediction that this year will see the country’s overall exports reaching $700 billion,” Cheong said.

Foreign direct investment in 2024 totaled $34.6 billion, marking a 5.7 percent increase from the previous year. The most popular sectors included cutting-edge industries such as semiconductors and bio. The largest investments came from Japan ($6.1 billion) and China ($5.8 billion).

Greenfield investments were the largest type of investment with $26.7 billion, a record-high volume. Greenfield investments are types of foreign direct investments where a parent company begins new operations in a foreign country from scratch.