On January 2, the Financial Associated Press reported (editor Zhao Hao) that an important official from the South Korean central bank stated that the risks posed by the political turmoil in South Korea to the economy may ease within six months, while the truly concerning factor is the external pressure from potential tariff policies from the USA.

On Thursday, local time (January 2), Soohyung Lee, a member of the South Korean central bank's seven-member monetary policy committee, told the media, "We have experienced two presidential impeachments, and the political turmoil and uncertainty from these events will ease within three to six months."

On Tuesday, the western district court of Seoul issued an arrest warrant for the suspended President Yoon Suk-yeol on charges of initiating a coup and abusing power. On the same day, the Constitutional Court of South Korea also stated that the trial regarding Yoon Suk-yeol's impeachment case had officially begun.

Before Yoon Suk-yeol, there were two presidents in South Korea's history who were impeached and passed by the National Assembly, namely Roh Moo-hyun and Park Geun-hye. Among them, Roh Moo-hyun's impeachment case was ruled as invalid, while Park Geun-hye became the first president to be successfully impeached and removed from office.

Lee Su-hyung stated that the political turmoil may not significantly impact the South Korean economy, and the downward risks posed by external factors are more concerning. She pointed out that Trump's potential tariffs have already put significant pressure on export-oriented countries, including South Korea.

Trump promised during his campaign that upon taking office, the USA would impose a 20% universal baseline tariff on most imported goods. If this tariff is implemented, it will undoubtedly strike South Korea's exports to the USA.

On the other hand, this could lead to inflation domestically in the USA, causing US interest rates to remain high, resulting in a strong dollar that further suppresses the won. Currently, the Exchange Rates of the won against the dollar are hovering near their lowest point since 2009.

Li Shuhong stated that although the South Korean central bank has policy tools such as "Forex reserves and coordination with government Institutions like the Ministry of Finance," government Institutions will only intervene to reduce volatility when necessary. Therefore, the valuation of the won is mainly determined by the market.

Earlier today, the South Korean government announced that the economy is expected to grow by 1.8% this year, which is lower than the South Korean central bank's forecast of 1.9% and also below the growth rates of 2% to 2.1% predicted by major international Financial Institutions.

Amid unprecedented levels of uncertainty, the South Korean government emphasized that "stable management" is its main policy focus. To boost domestic demand, the Ministry of Finance will expand spending tax exemption policies in the first half of 2025 and introduce incentives for companies to increase wages.

However, Li Shuhong noted that for the South Korean central bank, inflation rates and financial stability will be the main concerns, and if these three goals conflict with each other, then the importance of the growth rate will not be as high.

In November last year, the South Korean central bank unexpectedly lowered the benchmark interest rate by 25 basis points to 3%, which temporarily caused the won to plunge against the dollar. The South Korean Statistics department announced on Tuesday that the CPI in December 2024 rose by 1.9% year-on-year, accelerating from 1.5% in November.