 Navigating Global Shifts: Korea's Economic and Industrial Outlook for 2025Sungjin Kim ()
No 24-28, Industrial Economic Review from Korea Institute for Industrial Economics and Trade Abstract: We expect global economic conditions in 2025 to be characterized by improving consumer sentiment, increased investment, and a gradual recovery in global demand as central banks in major economies begin to cut interest rates. However, Korea’s 13 flagship industries will nonetheless be confronted with numerous risks, and these risks will continue to weigh on growth prospects. Key uncertainties include stagnant economic growth in China, geopolitical conflict and war, and ever-higher barriers to trade. The election of Donald Trump as the 47th president of the United States introduces a host of additional complexities. Trump has pledged to institute a universal tariff on all goods imported into the United States, and has also signaled disdain for eco-friendly industries. As a major trade partner of the US, a universal tariff would have a negative impact on Korea’s key industries, particularly on the automotive sector, and a shift away from promoting greener cars and technologies would affect the Korean battery sector. But not all of Trump’s policies would necessarily harm Korea, if they ever come to pass. Trade controls and other measures targeting China could benefit Korea’s shipbuilding, ICT, and display sectors, and shipments of machinery used in the fossil fuel sector would likely increase. 2025 forecasts are a mixed bag for Korea’s 13 flagship industries. The IT sector which includes the semiconductor, information and communication devices, and biohealth industries, is expected to record robust growth in exports, domestic demand, and production. But other key sectors, including the shipbuilding, home appliances, and displays industries, are more likely to stagnate or even decline. Projections for the automotive, steel, textiles, and batteries industries are downbeat, reflecting weaker demand and fiercer competition. We do anticipate that the petrochemicals, oil refining, and general machinery sectors will gradually enter a recovery phase, driven by improved demand conditions and price adjustments. To navigate these challenges, Korea must address declining domestic demand in contracting industries and counter the risks posed by increased imports. Strengthening export competitiveness and preemptively adapting to shifts in demand markets are other major priorities. Moreover, the government must work with the private sector to stabilize supply chains in response to a rising tide of protectionism, while at the same time fostering increased investments in green and digital transformation initiatives essential to securing long-term industrial competitiveness. Combined, these efforts are vital to helping ensure the continued resilience and growth of the Korean economy in an uncertain global trade and policy environment. Keywords: macroeconomic outlook; economic forecasting; South Korea; Korean economy; economic indicators; production; exports; imports; investment; KIET (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:kieter:2024_028 Access Statistics for this paper More papers in Industrial Economic Review from Korea Institute for Industrial Economics and Trade Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea. Contact information at EDIRC. |
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