"The unexpected announcement of martial law at the beginning of December, together with the ongoing political turbulence and the Jeju Air plane crash, has significantly dampened the economic sentiment", the central bank states in a statement.
It was at the beginning of December that South Korea's President Yoon Suk-Yeol suddenly declared a state of emergency with accompanying martial law in the country. A few hours later, he was forced to back down, but South Korea was thrown into political chaos.
Furthermore, the worst plane crash in the country's history occurred on December 29, when 179 people died at the airport in Muan in a crash. The two events led to weaker consumption and a dip in construction investments, according to the central bank.
The forecast for 2025 is now being revised downwards to the range of 1.6 to 1.7 percent. Previously, a growth rate of 1.9 percent had been predicted.
"Particularly affected is domestic consumption and other areas of domestic demand", the central bank states.
