Seoul warns of economic risks due to Middle East tensions

15th May 2026 – (Seoul) South Korea’s finance ministry has cautioned that downside risks to the economy persist, citing instability linked to tensions in the Middle East despite solid first‑quarter growth. In its latest monthly “Green Book” report released on Friday, the Ministry of Economy and Finance said the economy continues to face headwinds even as it shows signs of recovery. Officials pointed to heightened geopolitical uncertainty as a factor weighing on confidence and increasing volatility in global financial and energy markets. The ministry noted that although semiconductor‑led export growth remains strong and domestic demand has shown improvement, rising global oil prices have fuelled inflation concerns and placed additional pressure on household finances. Escalating tensions in the Middle East have also raised fears of supply chain disruptions and slower global expansion. Data showed that seasonally adjusted real gross domestic product expanded by 1.7 per cent in the first quarter compared with the previous three months, marking the fastest quarterly growth since the third quarter of 2020. Exports surged by 48 per cent year on year in April, driven largely by robust semiconductor demand. However, consumer confidence weakened, with the composite sentiment index falling 7.8 points from the previous month to 99.2. Investment indicators were mixed. Facility investment increased by 1.5 per cent in March from a month earlier, while retail sales rose by 1.8 per cent over the same period. Consumer prices climbed 2.6 per cent year on year in April, accelerating from a 2.2 per cent rise in March. Labour market data showed that 74,000 jobs were added in April compared with a year earlier, down from a gain of 206,000 in the preceding month, signalling a moderation in employment growth.