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박재훈투영인 프로필 사진박재훈투영인
Domestic Slump, Record Unemployment & Business Closures—Korean Economy in Crisis (Mar 10, 2025)
created At: 3/15/2025
Neutral
Neutral
This analysis was written from a neutral perspective. We advise you to always make careful and well-informed investment decisions.
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Fact
Unemployment benefits hit an all-time high in February: KRW 1.0728 trillion paid out, 117,000 new claims, marking the highest level since 1997. Self-employed workforce shrinks for two consecutive months, dropping over 200,000 to 5.5 million. KDI warns of continued recession risks for the third straight month, citing slumping exports and construction downturns.
Opinion
The simultaneous decline in domestic consumption and exports is a clear sign of structural economic weakening. The rise in unemployment benefits and mass business closures indicate worsening economic fundamentals, while Trump’s tariffs could deal an additional blow to Korea’s struggling trade sector, heightening the risk of a prolonged recession.
Core Sell Point
Korea’s structural economic weaknesses are deepening, with Trump’s tariff policies adding downward pressure. Investors should be cautious of further downside risks in the market.

Korea’s economy is facing mounting recession risks as both domestic consumption and exports struggle, with the job market taking a significant hit.

At the end of February, unemployment benefits payments surged 11.5% year-over-year (YoY) to a record-high KRW 1.0728 trillion, while new claims jumped 25.1% to 117,000, the highest February figure since related data was first compiled in 1997.

Small Business Collapse Worsens

The situation is equally dire for self-employed businesses, the backbone of Korea’s domestic economy.

  • In January, the number of self-employed individuals fell to 5.5 million, shrinking by more than 200,000 for the second consecutive month—returning to levels last seen during the COVID-19 crisis.

  • Rising costs and weakened consumer spending have fueled a surge in business closures.

  • Meanwhile, external demand is also declining, eliminating any immediate recovery prospects.

The Korea Development Institute (KDI) has warned of downside risks for three consecutive months, citing sluggish construction and worsening export conditions.

  • Falling semiconductor prices, a key pillar of Korea’s exports,

  • The Trump administration’s escalating tariffs—which threaten to deliver further shocks to Korea’s already weakened trade sector.

With employment deterioration and prolonged consumer weakness, analysts warn that Trump’s protectionist trade policies could further drag Korea’s economy into an actual recession.

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