South Korea’s economy would boom if its president is impeached, research firm says

A knock-on effect of South Korea President Yoon Suk-yeol’s “botched coup” attempt earlier this week could be a stronger economy, according to GlobalData TS Lombard.

In a Wednesday note, research analyst Rory Green said the martial law episode that unraveled earlier this week suggests President Yoon will be impeached and replaced soon.

“We think Yoon’s position is untenable: impeachment (if not this week then soon) followed by fresh presidential elections is highly likely,” Green said

President Yoon is on track to be the least popular president in Korean history, according to data from Gallup, cited by Green.

If Green’s prediction proves accurate, the center-left Democratic People’s Party (DPP) will likely field a presidential candidate who would win an imminent election.

And that could usher in a new wave of economic growth for South Korea, in part driven by the potential for friendlier relations between South Korea and China.

“A DPP president would increase fiscal expenditure boosting H2/25 activity and likely tilt foreign policy towards closer ties with Beijing and Pyongyang,” Green explained.

Green said there is headroom for South Korea’s economy to grow from its current GDP rate of an estimated 2.2%, which is below its average post-pandemic growth rate of 2.75%.

“A relatively quick political resolution would enable an emergency budget. More expansive fiscal spending in conjunction with another 50bps of policy rate cuts in H1/25 nudges up our GDP forecast to 2.1%,” Green said.

Alternatively, Green said South Korea’s economic growth rate would nudge lower if a presidential election is delayed past April.

According to the note, South Korea’s parliament needs just nine more votes to secure the president’s impeachment, assuming all 192 members of President Yoon’s opposition party vote for impeachment.