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24-04-2025
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South Korea’s Economy Faces Trade Headwinds

Date: 24-04-2025
Sources: cnbc.com: 4
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Image Prompt:

A dynamic financial news illustration of Asia-Pacific markets: split-screen scene showing a mixed stock board with green and red tickers across regional indices. In the foreground, a modern Seoul skyline with cranes and construction sites slowing, symbolized by idle machinery and downward arrows. A central Bank of Korea building displays “2.75%” with a steady gauge for FX stability and a cautious tone. On the right, a gleaming semiconductor fab with SK Hynix branding, stacks of high-bandwidth memory chips, and rising charts from AI demand; a blueprint for a new fab in the background. Subtle icons of U.S.–China trade thaw (two handshake silhouettes)

Summary

Asia-Pacific markets were mixed as South Korea’s surprise Q1 2025 GDP contraction underscored mounting pressures from global trade tensions and domestic weakness, even as AI-driven chip demand buoyed SK Hynix. The Bank of Korea held rates at 2.75% to stabilize FX amid heightened uncertainty and signaled growth risks, with analysts expecting additional rate cuts and fiscal support. SK Hynix, a leading HBM supplier to Nvidia, delivered strong year-over-year results and plans major capacity expansion, though it warned of potential H2 demand volatility from U.S.-led tariffs. Hopes of U.S.-China trade de-escalation lifted some regional equities, but Korean assets lagged as construction slumped and export risks persisted ahead of pivotal policy and trade negotiations.

Key Points

  • South Korea’s Q1 2025 GDP fell 0.1% y/y and 0.2% q/q, led by a steep construction downturn.
  • The Bank of Korea kept rates at 2.75%, citing FX stability and downside growth risks; more cuts and fiscal support are expected.
  • SK Hynix beat estimates on AI memory demand, leading HBM market share and planning a new fab despite tariff uncertainties.
  • Regional stocks were mixed as hopes of U.S.-China trade thaw offset concerns over U.S.-led tariffs on Korean goods.
  • BoK governor warned global supply-chain-linked trade tensions are broadly harmful, weighing on South Korea’s outlook.

Articles in this Cluster

Asia markets live: Korea GDP, SK Hynix, U.S.-China trade

24-04-2025

Asia-Pacific stocks were mixed, following Wall Street gains on hopes of easing U.S.-China trade tensions. Japan’s Nikkei rose over 1%, Australia’s ASX 200 gained 0.56%, while South Korea’s Kospi fell 0.47% and Hong Kong’s Hang Seng slipped 0.29%. South Korea’s Q1 2025 GDP unexpectedly contracted 0.1% year over year (and 0.2% quarter over quarter), driven by a 12.4% plunge in construction; ANZ expects 2–3 more BoK rate cuts this year alongside fiscal support. SK Hynix beat estimates as AI-driven chip demand lifted revenue 42% and operating profit 158% year over year. Auto stocks were mixed after President Trump floated tariff exemptions: Japanese automakers rallied, while Korean and Chinese names declined. U.S. markets extended gains amid signals of potential U.S.-China trade de-escalation; Trump suggested China tariffs could be reduced, and China indicated openness to talks.
Entities: South Korea GDP, SK Hynix, U.S.-China trade tensions, Bank of Korea, ANZ • Tone: analytical • Sentiment: neutral • Intent: inform

Nvidia supplier SK Hynix quarterly earnings top estimates

24-04-2025

SK Hynix beat Q1 estimates on strong AI memory demand, posting revenue of 17.64 trillion won and operating profit of 7.44 trillion won, up 42% and 158% year over year, respectively. Sequentially, revenue fell 11% and operating profit 8% from record Q4 levels. The company, a key HBM supplier to Nvidia, captured about 70% of the HBM market and overtook Samsung in overall DRAM share (36% vs. 34%), per Counterpoint. SK Hynix warned that macro uncertainties and potential U.S.-led tariffs could add demand volatility in H2, though it expects limited tariff impact on AI servers and improving PC/phone demand as AI features roll out. It will build a new DRAM/HBM fab in Cheongju, targeting early mass production by November 2025, with long-term investment exceeding 20 trillion won, amid expanded government support for the chip sector. Shares slipped 0.9%.
Entities: SK Hynix, Nvidia, HBM (High Bandwidth Memory), Samsung, Counterpoint • Tone: analytical • Sentiment: neutral • Intent: inform

South Korea Q1 GDP contracts 0.1%

24-04-2025

South Korea’s economy contracted 0.1% year on year in Q1 2025, its first decline since Q4 2020 and below expectations for a slight rise. GDP also fell 0.2% quarter on quarter. The downturn was driven largely by a 12.4% slump in construction, alongside weaker domestic demand and exports amid political uncertainty and worsening trade conditions. The Bank of Korea, which held rates at 2.75% in April, signaled growth will undershoot its earlier 1.5% forecast and is expected by analysts to cut rates further, with additional fiscal stimulus likely. Ongoing political turmoil and U.S. trade tensions— including 25% tariffs on Korean steel and autos—are weighing on the export-led economy as Seoul seeks a trade deal with Washington. Elections on June 3 may shape the policy outlook and negotiations.
Entities: South Korea, Q1 2025 GDP contraction, Bank of Korea, construction sector slump, U.S. trade tensions • Tone: analytical • Sentiment: negative • Intent: inform

Trade tensions are 'bad for everybody,' says Bank of Korea governorStock Chart Icon

24-04-2025

Bank of Korea Governor Rhee Chang Yong warned that escalating U.S.-led trade tensions and tariffs are “bad for everybody,” directly and indirectly hurting South Korea through global supply chains spanning Vietnam (semiconductors), Mexico (autos/electronics), and Canada (batteries). He said these headwinds have increased downside risks to growth, reflected in South Korea’s first GDP contraction since 2020 (-0.1% y/y in Q1). Political instability and FX volatility also weighed on the outlook. The BoK held rates at 2.75%, prioritizing exchange-rate stability over a preemptive cut, with Rhee likening the environment to “entering a dark tunnel” and advocating caution while awaiting clearer data. South Korea is preparing U.S. trade talks, seeking mutually beneficial outcomes.
Entities: Bank of Korea, Rhee Chang Yong, South Korea, United States, global supply chains • Tone: analytical • Sentiment: negative • Intent: inform