Seoul: The South Korean economy contracted 0.2 percent in the first quarter of this year, unchanged from an earlier estimate, as revealed by central bank data on Thursday. This downturn is attributed largely to a domestic political crisis and uncertainties linked to U.S. President Donald Trump's aggressive tariff scheme.

According to Yonhap News Agency, the country's real gross domestic product (GDP)-a critical measure of economic growth-contracted 0.2 percent in the January-March period compared to three months earlier. This marks the first negative growth in nine months, based on preliminary data from the Bank of Korea (BOK).

South Korea's economy had previously expanded 1.3 percent in the first quarter of 2024 but experienced a contraction of 0.2 percent in the second quarter before achieving 0.1 percent growth in both the third and fourth quarters. The decline in exports by 0.6 percent in the first quarter was primarily due to reduced shipments of chemicals, machinery, and equipment.

Facility investment decreased by 0.4 percent on a quarterly basis, marking its weakest performance since the first quarter of 2024. Construction investment saw a significant drop of 3.1 percent, while private spending declined 0.1 percent, largely due to weakening demand for services.

The unexpected negative growth coincided with former President Yoon Suk Yeol's imposition of martial law on December 3, which, along with the resulting political turmoil, suppressed domestic demand. The U.S.' extensive tariff scheme has also impacted the trade-dependent South Korean economy.

Trump announced reciprocal tariffs, including a 25 percent levy on South Korean goods, though the implementation was later postponed for 90 days. Trade negotiations are ongoing between South Korea and the United States, aiming for a "package" agreement by July 8, when the 90-day suspension of U.S. tariffs will end.

Last week, the central bank significantly lowered its outlook for South Korea's economic growth this year to 0.8 percent from the previous forecast of 1.5 percent, citing reduced consumption and slowing export growth amid uncertainties from Washington's tariff measures. The BOK also released revised data on the country's gross national income (GNI) for 2024, revealing a 1.5 percent increase in per capita GNI to US$36,745 last year.

In terms of the Korean won, the GNI rose 6.1 percent to a record high of 50.12 million won. Earlier, the central bank had predicted the per capita GNI would increase by 1.2 percent to $36,624.