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Political Turbulence Clouds South Korea’s Economic Outlook

South Korean President Yoon Suk Yeol’s short-lived declaration of martial law on December 3, 2024, and his subsequent impeachment on December 14 have plunged the country into its worst political crisis in nearly 40 years, with some signs of a negative economic impact. The economy was already showing signs of weakness before the December political crisis. The additional concerns about political instability have led some forecasters to downgrade their outlook for Korea in 2025.

Martial Law in South Korea: Understanding the Why

On December 3, 2024, South Koreans and people across the globe alike were stunned when
President Yoon Suk Yeol declared martial law in a late-night, unannounced address. This marked the first use of martial law since South Korea’s transition to democracy in the late 1980s, reviving memories of the country’s authoritarian past and prompting widespread domestic backlash.