The Federation of Korean Trade Unions (KCTU) parked on December 7 protest vehicle on the road in front of KBS Broadcasting Station in Yeouido, Seoul/ Photo: Korea IT Times.
President Yoon Suk Yeol's declaration of emergency martial law on December 3 failed, but it shocked Korean society. Thousands of citizens have gathered in front of the National Assembly, holding candles and demanding the protection of democracy through widespread protests. This situation raises concerns about domestic political instability and its potential cascading effects on the global economy.
Domestic economic uncertainty is already increasing due to political instability's repercussions. Given Korea's high dependence on exports, the reactions of major partner countries are particularly noteworthy.
As Korea's largest trading partner, the United States has expressed deep concerns among investors regarding the rising risks to the Korean economy. At this point, as plans for future investments are being reassessed and strategies for managing business operational risks are being developed, the U.S. government is urging political stability in Korea and intensifying diplomatic efforts.
China is also showing a sensitive response. Disruptions in parts imports could directly impact Chinese manufacturing, making it impossible to avoid fluctuations in economic cooperation with Korea. The Chinese government reportedly conveys its concerns through informal channels and closely monitors the situation.
The European Union (EU) is not exempt from these developments. Given the extensive economic cooperation with Korea, investors are discussing postponing and scaling back investment plans as uncertainty grows. The EU is urging political stability while considering support measures for risk management among its businesses.
This situation also affects energy-supplying countries in the Middle East. Korea's political instability is making it inevitable for energy contracts and investment projects to be reassessed, and such uncertainty could lead to changes in energy supply.
From a global economic perspective, Korea’s martial law declaration is a cause for concern. Considering Korea's role in the worldwide market, prolonged political instability could negatively impact global supply chains, heightening the risk to global economic growth. The international community supports the Korean government’s swift responses and calls for political stability to prevent the situation from exacerbating.
The political turmoil caused by President Yoon Suk Yeol's declaration and lifting of martial law poses a serious threat to the Korean and global economies. The Korean government must proactively work to restore stability and minimize economic shocks. The international community must actively support these efforts and strengthen cooperative measures, as this is not merely an issue for South Korea but a significant matter that affects the stability of the global economy. Depending on the situation, the repercussions could become even more severe.
