South Korea is set to vote today at the National Assembly on whether to impeach Acting President Han Duck-soo. This decision could lead to disruptions in financial markets and diplomatic efforts.
The Kospi Index dropped more than 1% on Friday despite other major indices in Asia being in positive territory.
Yesterday, the main opposition Democratic Party (DP) filed an impeachment motion against Han after his delay in appointing three judges to fill vacancies at the Constitutional Court. These new judges could potentially assist in the removal of President Yoon Suk Yeol from office.
Nevertheless, the nine-member Constitutional Court, currently with only six judges, is still set to hold a pre-trial hearing on Friday and must make a decision by June.
As for Han, if the parliament impeaches him, he will become the first acting president in South Korea to be impeached, just less than two weeks after President Yoon’s suspension. Finance Minister Choi Sang-mok would then take over as interim leader until a new president is elected.
In South Korea, 151 votes are required to impeach the prime minister, a position held by Han. The DP, with 170 seats, has enough support for this process. However, there is uncertainty about whether the motion will target Han as prime minister or president, as removing a president requires 200 votes.
This political turmoil adds to the existing risks for South Korea’s economy, which is expected to grow more slowly next year. Companies are preparing for Donald Trump’s return, while export growth is slowing due to weak semiconductor demand.
Brad Bechtel, global head of foreign exchange at Jefferies LLC, noted that the strong US dollar and domestic turbulence have caused the South Korean won to decline by 0.5%, reaching its weakest level since 2009.
Moreover, a recent survey shows that South Korean consumer and business confidence has fallen to its lowest point since the Covid-19 pandemic. In response, policymakers have pledged “unlimited liquidity” if necessary to reassure market participants and mitigate the economic fallout.
