ANKARA 

South Korea's economy shrank in the first quarter of 2025, marking its first quarterly contraction in nine months, as prolonged political turmoil and escalating global trade tensions weighed heavily on domestic demand and exports, the country’s central bank said Thursday.

The real gross domestic product (GDP) contracted by 0.2% from the previous quarter, according to preliminary data released by the Bank of Korea (BOK), Yonhap News reported. 

Asia’s fourth-largest economy had shown modest resilience in 2024, with 1.3% growth in the first quarter, followed by a 0.2% decline in the second and minimal 0.1% growth in the third and fourth quarters.

“Prolonged domestic political uncertainty and rising risks in global trade environments due to uncertainties stemming from the US tariff policy have delayed the recovery in consumer and investment sentiment,” BOK official Lee Dong-won told reporters.

Lee also pointed to other “unusual” negative contributors, including postponed demand for high-performance semiconductors, project suspensions at certain construction sites, and the impact of large-scale wildfires.

South Korea’s export-dependent economy also suffered from a 1.1% drop in outbound shipments during the January–March period, largely due to decreased exports of chemicals, machinery, and equipment.

The downturn coincided with a period of political upheaval following former President Yoon Suk Yeol’s imposition of martial law on Dec. 3, which sparked a national crisis and dampened consumer spending. Yoon was removed from office on April 4 after the Constitutional Court upheld his impeachment in a unanimous ruling by the National Assembly.

Adding to economic pressure are US trade measures, including President Donald Trump's proposed "reciprocal" tariff plan. The policy includes a 25% tariff on South Korean goods, though its implementation was temporarily paused for 90 days.