South Korea’s central bank on Tuesday slashed interest rates and its annual growth forecast as it looks to bolster the economy in the face of US tariffs and amid the fallout from President Yoon Suk Yeol’s brief declaration of martial law last year.
An official at the Bank of Korea told AFP it expected gross domestic product to expand 1.5 percent in 2025, down from its initial estimate of 1.9 percent.
The benchmark interest rate would also be lowered “from the current 3.00 percent to 2.75 percent”, the official said.
The economy grew less than expected in the final three months of 2024 as Yoon’s martial law move hit consumer confidence and domestic demand.
There is also a growing worry about US President Donald Trump’s hardball trade policies that have seen him impose a broad range of levies on some of his country’s biggest trading partners since taking office in January.
Among them are 25 percent tariffs on steel and aluminium imports.
He also warned last week that he would impose levies “in the neighbourhood of 25 percent” on auto imports and a similar amount or higher on semiconductors and pharmaceuticals.
South Korea is home to global chipmaking giants Samsung and SK hynix, and was the fourth-largest exporter of steel to the United States last year.