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2025 Economic Outlook

1. 2025 Economic Growth Rate Forecast

• The phrase "Significant Growth in 2025" reflects a positive outlook.
• South Korea's projected growth rate for 2025 is 2.6%, a figure achievable under stable global economic conditions.
• However, current political and economic variables (global geopolitical conflicts, exchange rate volatility, etc.) make this target difficult to reach.

2. US Federal Funds Rate Movements and Impact

• The US Federal Funds Rate is expected to decrease by 1% annually after 2024.
• A decrease in the benchmark interest rate is projected to positively impact stock and real estate markets, although current US-China tensions and high-tariff policies act as variables.
• The decrease in the Federal Funds Rate may trigger a strong dollar, significantly affecting exchange rates and international trade.

3. Exchange Rate Forecasts and the South Korean Economy

• The current KRW/USD exchange rate is hovering around 1,400 won, with concerns of a potential surge past 1,600 won in the short term.
• Impacts of exchange rate increases:
  • Increased import prices: Adding burden to the domestic economy.
  • Weakened competitiveness in export markets: A major obstacle to economic growth.
• Warnings from international credit rating agencies and the possibility of a national credit rating downgrade.
• South Korea's high trade dependence (75%) and 100% reliance on energy imports may accelerate the increase in the exchange rate.

4. Political Risks and the Economy

• Domestic political instability (e.g., potential emergency situation in December) is a major cause of foreign capital outflow and rising exchange rates.
• Political instability leads to increased national CDS premiums (increased risk of national default) and foreign distrust.
• The US-China trade conflict and Trump's policies (high tariffs, global supply chain restructuring, etc.) are expanding global uncertainty.

5. Investment Strategies and Recommendations

• If a strong dollar environment persists, the cost of importing oil and other major resources will increase, putting pressure on the domestic economy.
• Diversification of a global portfolio is necessary to protect personal assets:
  • Hedging against exchange rate risks through investments in leading US companies (Apple, NVIDIA, etc.).
• A strategic investment approach is needed, considering the potential for long-term economic growth despite the short-term difficulties of the South Korean economy.

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< Summary >

The economic outlook for 2025 reflects positive expectations, but there is high uncertainty due to current factors such as rising exchange rates, political risks, and international trade conflicts.

While the US Federal Funds Rate cuts may positively affect real estate and stock markets, the possibility of a strong dollar environment and the structural problems of the South Korean economy are likely to persist.

If the exchange rate continues to rise, the burden on import prices and the self-employed will increase, which could negatively affect the overall economy.

Individual investors are advised to minimize risk by investing in global assets, such as leading US stocks.

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• Crafted by Billy Yang
• [Related Articles at Next-Korea.com]
  2025 Economic Outlook
  Strong Dollar and South Korean Economy

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