“Although the past two impeachments had no impact on the economy…this time facing external headwinds.”
On the 7th, when the impeachment motion against President Yoon Suk-yeol was proposed at the National Assembly’s plenary session, ruling party lawmakers collectively exited the chamber. The photo shows opposition lawmakers, including Park Chan-dae, the floor leader of the Democratic Party, appealing to ruling party lawmakers to participate in the vote. Photo by Lee Sang-seop.
According to the Herald Economy, Goldman Sachs, a global investment bank, analyzed on the 9th that due to political instability, including the martial law situation and the impeachment situation, the downside risk for Korea’s economic growth rate next year has increased.
Kwon Goo-hoon, a senior economist at Goldman Sachs, released a report titled “The Impact of a Short Martial Law Situation” and stated, “We maintain next year’s Korean growth rate forecast at 1.8%, lower than the market average, but the risk is increasingly skewed downward.”
He analyzed that political turmoil in the past, such as President Roh Moo-hyun’s impeachment in 2004 and President Park Geun-hye’s impeachment in 2017, did not have a significant impact on growth rates, but this time it is different.
Economist Kwon pointed out, “In the previous two cases, the Korean economy grew, benefiting from external tailwinds such as China’s economic boom in 2004 and the strong upward trend in the semiconductor cycle in 2016. In contrast, in 2025, Korea, along with other export-centered economy countries, is facing external headwinds due to China’s economic slowdown and the uncertainty of U.S. trade policy.”
In the short term, it is expected that a “caretaker government” will focus on securing and maintaining financial market and macroeconomic stability, executing existing policies.
However, Economist Kwon emphasized that the National Pension Service’s significant overseas asset holdings could be used to support the securities and foreign exchange markets in case of excessive market instability and a sharp decline in the won’s value, and that there is sufficient room for monetary and fiscal policies.
He explained, “Emergency liquidity support and additional monetary easing measures, such as the additional policy rate cuts announced at last month’s Monetary Policy Committee meeting, are already in preparation. Once political stability is restored and potential transitional measures become clear, considering Korea’s relatively low government debt, future fiscal easing could support growth without threatening fiscal sustainability.”
He also highlighted the need to pay attention to key events such as further impeachment proposals by the opposition, the formation of a transitional cabinet, and discussions on constitutional amendments.