South Korea Warns Middle East Tensions Risk Economic Growth

The Ministry of Economy and Finance reported on April 17 that escalating geopolitical tensions in the Middle East are increasing downside risks for the South Korean economy. In its monthly Green Book report, the ministry stated that rising global oil prices and supply disruptions have fueled inflation and weakened business and consumer sentiment. Consumer prices rose 2.2 percent in March, and the consumer sentiment index fell to 107, the lowest level since May 2025.

These economic pressures coincide with regional instability following U.S.-Israeli strikes on Iran in late February. Market stability currently depends on peace talks between the United States and Iran as a two-week ceasefire agreement nears its expiration.

Despite these risks, South Korea saw a significant trade boost in March. Exports surged 48.3 percent year-on-year, surpassing $80 billion for the first time, driven by record semiconductor shipments. To counter the volatility of the Middle East conflict, the government plans to maintain an emergency economic response system and execute supplementary budgets.