Business association heads forecast sluggish economy in 2025

By Nam Hyun-woo

Korea’s top business association leaders shared a pessimistic outlook for the coming year, forecasting a slowdown in economic growth and mounting uncertainties due to political turmoil both domestically and internationally, in their New Year messages released on Sunday.

Korea Chamber of Commerce and Industry (KCCI) Chairman Chey Tae-won said in his New Year message that the Korean economy is expected to face “a challenging situation” in the coming year, despite recent recoveries in exports and investor sentiment.

“Given the recent internal and external variables, many domestic and global research institutions predict that our economy will likely grow within a 1 percent range next year,” Chey said.

Chey noted that the industrial paradigm shift driven by artificial intelligence and drastic changes in the global trade environment are compelling Korean businesses to “overhaul their fundamental managerial practices.”

He also emphasized that businesses urgently need political stability to focus on their work, adding, “Policies related to people's livelihoods and the economy must be pursued without hesitation.” Korean businesses are grappling with uncertainties caused by the country’s political turmoil, including President Yoon Suk Yeol’s abrupt martial law decree and subsequent impeachment.

Federation of Korean Industries (FKI) Chairman Ryu Jin also said, “We cannot welcome the New Year with hopes and expectations only.” He added, “The Korean economy is facing greater challenges than ever before.”

“Amid intensifying geopolitical risks and protectionism, the U.S. under the Donald Trump administration will pursue its America First principle,” Ryu said. “However, our economy is losing its fundamental strength due to low birth rates, entering an era of low growth with annual expansion in the 1 percent range. Korea once again finds itself at a crossroads between growth and stagnation.”

Ryu said the FKI will take on a diplomatic role in the private economic sector. “We will actively communicate with the new administration in the U.S. to minimize risks and expand opportunities,” he said. Ryu was invited to attend Trump’s inauguration ceremony slated for Jan. 20.

Korea Enterprises Federation Chairman Sohn Kyung-shik said, “Korea is facing a massive crisis, compounded by political turmoil and economic challenges.” He added, “All economic players must unite and faithfully fulfill their respective roles.” He also called for improvements in Korea’s labor and wage systems to better address these issues.

Korea International Trade Association Chairman Yoon Jin-sik also forecast an expansion of protectionist moves next year following the Trump administration, while stressing the urgent need for reform in the country’s economic structure and regulations to address the declining working-age population and the slowdown in potential growth.

“To counter these challenges, we will focus on on-site efforts and initiatives to review the rapidly changing domestic and international trade environment, while enhancing innovation and competitiveness for export companies,” Yoon said.