Seoul, South Korea – The South Korean government on Friday proposed a 12.2 trillion won ($8.6 billion) supplementary budget aimed at mitigating mounting economic risks driven by global trade conflicts and escalating domestic political uncertainty.
The move follows recent government efforts to shield the country’s vital auto and semiconductor sectors, which have fueled a surge in exports to the United States but are now vulnerable to tariffs introduced by Washington.
“There are concerns about some companies struggling with liquidity difficulties due to the global trade conflict sparked by U.S. tariffs and a delayed recovery in domestic demand,” said Acting President Han Duck-soo during a cabinet meeting. He warned that these pressures could spill over into broader financial markets.
South Korea’s central bank, the Bank of Korea, cited “significant” risks stemming from U.S. President Donald Trump’s tariff policies and signaled a possible interest rate cut in May, after holding rates steady this week. The bank also acknowledged downside risks to its 1.5% growth forecast for 2025, with a possible economic contraction in the first quarter.
