South Korea’s economy exhibited negligible growth in the final quarter of 2024, primarily attributed to ongoing political turmoil, according to the South Korean central bank. Despite a full-year growth of 2 percent, the last quarter’s performance was particularly lackluster, registering a mere 0.1 percent increase. This underperformance marks a deviation from expected growth in Asia’s third-largest economy.

The persistent political unrest has adversely impacted consumer confidence, leading to reduced domestic expenditure. In addition, the country is grappling with rising unemployment rates, now the highest since 2021. As a nation heavily reliant on exports, South Korea faces further economic pressures from potential import tariffs proposed by the new U.S. President, Donald Trump. The South Korean government has expressed concern over these developments, anticipating a possible decline in U.S. sales.

To bolster exports, the South Korean government announced a substantial support package of $250 billion (approximately €240 billion) on Thursday. Meanwhile, Hyundai, one of the country’s major exporters alongside Samsung and Kia, has projected slower growth for 2025 due to political instability and looming tariff threats. The automaker aims to sell 4.17 million vehicles this year, a marginal increase of 0.1 percent from the previous year, and forecasts a modest revenue growth of 3 to 4 percent, a significant decrease from last year’s 7.7 percent growth. Despite a 17 percent decline in quarterly profits, Hyundai achieved record sales for the year.

In the political realm, the situation remains volatile following the arrest of suspended President Yoon Suk-yeol. In early December, Yoon declared a state of emergency, a decision rapidly condemned by the parliamentary opposition. His pre-trial detention was recently extended, prompting unrest among his supporters. This political instability continues to cast a shadow over South Korea’s economic prospects heading into the new year.