Middle East Crisis Cripples South Korea's Economy

(MENAFN) South Korea's finance chief warned Friday that the drawn-out Middle East conflict is beginning to bite into the country's real economy and household finances, even as export figures remain at record levels.

Finance Minister Koo Yun-cheol delivered the stark assessment at an inter-ministerial economic meeting convened in Seoul to examine the domestic fallout from the ongoing regional crisis, the Finance Ministry confirmed. The session was reported by a South Korean news agency.

"While South Korea has shown strong resilience against crises by posting record exports, current account surpluses and stock market indexes, the prolonged war has started to have a visible impact on the real economy and people's livelihoods," Koo was quoted as saying.

The minister pledged that authorities would work to shield households from further economic strain while keeping a close watch on both domestic conditions and international developments.

Koo also acknowledged the cooperation of local fuel retailers in adhering to the government's price ceiling program, noting that pump prices continue to hold below the mandated cap.

Markets in Free Fall
The warning arrived as South Korean equities took a severe beating. The benchmark KOSPI plunged 488.23 points — a drop of 6.12% — to close at 7,493.18, triggering a sell-side sidecar mechanism despite having touched an all-time high earlier in the session. The tech-heavy KOSDAQ was not spared, shedding 61.27 points, or 5.14%, to finish at 1,129.82.

Second-Half Growth Strategy in the Works
Looking ahead, Koo said the government is crafting an economic growth blueprint for the latter half of 2026, with priorities centered on reinforcing economic security and addressing widening inequality — drawing directly on lessons learned from the Middle East conflict. Officials will also scrutinize evolving global dynamics, particularly in the semiconductor industry, he added.

The ministry expects to formally release the second-half strategy before the close of June.

Property Market Also in the Crosshairs
In a separate session Friday, Koo presided over a ministerial roundtable on real estate, vowing that the government would deploy every tool at its disposal to bring stability to the housing market.

"A prompt supply of housing is more critical than anything else," he said, adding that the government would press ahead with accelerating housing delivery and intensifying enforcement against fraudulent or predatory practices in the property sector.

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