South Korea GDP Falls; Trade Talks Planned

South Korea's economy contracted by 0.2% quarter-on-quarter in the first quarter of 2025, marking its first decline since Q2 2024 and missing forecasts of modest growth. Annual GDP also slipped by 0.1%, reflecting widespread weakness in exports, private consumption, and government spending. The downturn is attributed to domestic political turmoil and rising concerns over U.S. President Trump's tariff policies, which have particularly affected export-dependent sectors. In response to the weak data, calls have grown for the Bank of Korea to consider further interest rate cuts. South Korea and the U.S. are scheduled to hold a '2+2' trade dialogue to address trade tensions, while Trump has suggested he may soften tariffs on China, potentially impacting future exports. Following the GDP report, the Korean won depreciated below 1,430 per U.S. dollar, signaling market anxiety over economic and policy uncertainty.